Economists Say Recession Unlikely in Near Term

By Ted Craig February 07, 2019 364

 

Another recession seems inevitable.

It has now been 116 months since the end of the last recession. The longest period without a recession was the 120 months between March 1991 and March 2001.

This leads some analysts to argue that another slowdown is just around the corner.

But others point out that there is no such thing as an expiration date for an expansion.

George Hoffer professor emeritus of economics at Virginia Commonwealth University, said recession always have a trigger and it’s hard to see what that is today.

“There are no real bubbles in the economy,” he said.

Hoffer said the biggest case against the idea the economy will “die of old age” is the slow growth following the end of the last recession. He said it wasn’t until 2012 that the economy really started picking up steam.

This means many resources remain untapped, including a large supply of available workers.

Cox Automotive senior economist Charlie Chesbrough agrees that talk of an impending recession is overdone.

“It’s a little too early to say the sky is falling,” Chesbrough said.

There are some signs making Chesbrough cautious, however.

One of those is the diminishing difference between the yield on two-year and 10-year treasury bonds. A so-called inverted yield curve has signaled a recession in every instance in the past 50 years.

A main cause of recessions has been the Federal Reserve growing too aggressive in its rate increases.

Chesbrough points out the point of those increases is to slow the economy, but sometimes that slowing can become stalling.

Hoffer said the Federal Reserve has signaled plans to decrease the number of rate hikes this year. Other government policy continues to accommodate economic growth, such as lower taxes, fewer regulations and continued spending.

Chesbrough said even if there is another recession, the car business could do well.

The 2008 downturn was unusual because it was a credit crisis, he said.

The 2001 recession is more typical. During that downturn, auto sales actually rose due to aggressive incentives such as General Motors’ “Keep America Rolling” campaign following the Sept. 11 attacks.

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Last modified on Thursday, 07 February 2019 16:05