The Next Recession: Not A Matter of When But A Matter of How Soon

It's been awhile since I've linked to Crazy Eddie's Motie News - if Pinku-Sensei can pass along a good hard cider recommendation for me to get drunk to, that would be nice - but he recently posted an article about the impact of the tax cuts would have on the economy and it looks like he's got a better handle than I do on how the coming recession is gonna look.

If I might quote from the parts of his analysis that stand out to me:

Three things could trigger the next recession.  The most likely would be an inversion of the yield curve, which means that short-term interest rates would rise higher than long-term interest rates.  The Federal Reserve has been raising short-term rates for the past two years while long-term rates have been rising much more slowly.  If present trends continue, short-term rates will rise above long-term ones within a year or two, which always signals a recession within a year...

The second is a rapid rise in oil prices, which has occurred either slightly in advance or concurrently with every recession since 1973...

The last, which the U.S. saw along with both of the above during the last recession, would be a crash in housing prices.  However, that is not as reliable an indicator of contraction, as it took nearly two years between the bursting of the housing bubble and the onset of the Great Recession of 2008-2009, barely happened before the recession of 1990-1991, and it didn't happen at all before the 2001 recession...

...I want my readers to notice the timing of recessions.  They range from seven (2001 to 2008) to eleven years (1990 to 2001) apart.  That range is exactly consistent with the Juglar Cycle, an economic cycle that lasts seven to eleven years, the downturns of which correlate to U.S. recessions since 1980.  The Great Recession technically began in December 2007 and adding eleven years to that means the next one should start no later than December 2018.  We're due...

...In fact, I expect the next recession to be somewhere between the 2001 recession or the 1990-1991 recession in its effects, probably closer to 2001.  Before then, the extra disposable income runs the risk of overheating an already booming economy, never mind that the fruits of that economy are very inequitably distributed.  That will increase demand for oil and other energy sources, making their prices go up.  That will cause inflation to rise again as energy costs become distributed throughout the economy.  Higher inflation will prompt the Federal Reserve to raise short term rates, eventually inverting the yield curve.  Viola, recession!

Now, I won't blame the tax cuts for this.  All of this is going to happen anyway; the tax cuts might marginally speed up the process and make it more acute.  It might make the difference between the recession starting in November or December of 2018...

In short: I think he's telling us we're gonna be screwed by November 2018.

Good timing, Republicans, if you can make that recession happen by November 1st before the midterms. It should give us voters additional incentive to vote you fuckers out.

One of the things I note about these recessions is how they seem to coincide with Republican control of the Presidency (and usually control of Congress). If Pinku-Sensei is correct about how the Juglar Cycle ties into the recession cycles, wouldn't Republicans with any economic backgrounds recognize the pattern and do something to change it by committing to programs that wouldn't exacerbate the recessions the way their current policies seem to do?

Then again, I fear most Republicans with economic backgrounds focus too much on their Randian fixations of greed and self-interest. /sigh

Anyway, Pinku-Sensei does a good job putting his arguments together on this. Go read his work, and then GET THE DAMN VOTE OUT FOR DEMOCRATS TO GET THE DAMN REPUBLICANS OUT OF OFFICE. Thank ye.