Friday, August 3, 2018

Many economists see a recession coming (as they did in 2007)

I always get peeved when I read that "there were no economists that saw the 2008 Great Recession coming".

These two articles list 9 different economists that predicted the 2008 Great Recession fairly accurately.

In a note I wrote in Facebook (remember "Notes"?), I also mention that Paul Krugman and Joseph Stiglitz had written about the housing bubble, the growing concern with mortgage backed securities and the financial sector.

Now, several economists (including me) are warning that there are growing signs of an upcoming recession. These include:

- overvalued stock market, at twice the historical average cyclically adjusted price-to-earnings ratio (CAPE)

- a new housing bubble

- growing personal, corporate and public debt

- rise in loan delinquencies and mortgage fraud

- interest rates are close to "inversion" (long term rates lower than short-term rates).

- lower long-term confidence.

- past due a recession based on the solar cycle models.

To these cyclical factors, we have to add the impact of Trump's trade wars; as well as the effect on oil prices of Trump's reneging on the Iran nuclear deal, and the collapse of oil production in Venezuela.

Here are some other signs:

So please, in 2020, I hope they won't say nobody saw the recession coming!

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