The Odds For A Trump Recession Are Inching Higher

One of the reasons the Dow 30 and S&P 500 indexes both fell over 15% in December was a concern that the economy could slow down enough that companies could have negative earnings growth, and that the economy will fall into a recession in late 2019 or 2020. The major concerns revolved around the length of the current expansion, recession forecasts, the shrinking spread between short and long term interest rates, the Federal Reserve shrinking its balance sheet, potential escalation of Trump’s tariffs on China (and other countries), the automotive and housing industries decelerating and slowing economies around the world.

While the stock markets have bounced back due to the U.S. economy still projected to grow this year (even though it is slowing), the Federal Reserve “pausing” its interest rate increases and the hope for the U.S. and China to strike a trade deal, the overhangs to the equity markets and economy remain.

The current economic expansion will hit a decade in June of this year , which would match the longest on record of April 1991 to March 2001. It would also be almost twice as long as the 58 months experienced for the past 11 cycles starting in 1945. While the economy could keep on growing, just the length of the current expansion means a recession or at least a slow down of the economy should appear sooner rather than later.

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