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Updated over 6 years ago on . Most recent reply

User Stats

35
Posts
174
Votes
Doug Utberg
  • Specialist
  • Newberg, OR
174
Votes |
35
Posts

What will trigger the next recession?

Doug Utberg
  • Specialist
  • Newberg, OR
Posted

Background: The economy is on a tear, but trees don't grow to the sky.  At some point, it will over-extend and go into recession when financial commitments default.

Last time, the trigger was a default on home mortgages.

It doesn't look like that is a major risk area currently.  However, there is going to be something.

My theory - I think that commercial debt from companies in the retail sector is a major weak point for the economy.  When the financially troubled big box retailers start defaulting on their debt service payments, I see the potential for a causal chain that spreads out to the broader economy.  (Not nearly as severe as 2008, but will definitely result in lots of vacant commercial property and much higher risk premiums for bank lending)

What do you think it will be?

Most Popular Reply

Account Closed
  • Lender
  • Pensacola, FL
626
Votes |
658
Posts
Account Closed
  • Lender
  • Pensacola, FL
Replied

I'll respond with a quote from Warren Buffett: Predicting rain doesn't count. Building arks does.

I agree with everything you said in your scenario, along with many other possibilities. I can't predict exactly when the storm will reach landfall, but I can start battening down my hatches now.

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