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Recession Could Occur by Presidential Election

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A report by the Council of Foreign Relations projects that a recession could occur as soon as the 2020 Presidential Election. 

The report references the years preceding the 2008 financial crisis, which saw a rising gap in the growth in home prices and household income, and a “parallel dynamic is playing out” today.

“In 2018, as in 2005, housing-price growth began falling rapidly, with significant price drops occurring in several major markets … The trend-line in existing-home sales growth has also been down since 2015, tipping into negative territory at the start of last year. Similar drops have preceded nearly every recession since 1970,” the report states. 

Additionally, the report says that if these trends continue the economy should expect to see falls in home prices—possibly beginning by mid-2020—dragging down household spending with a falling economy. 

“Growth has been slowing, with Trump’s tariff war hitting exports. Manufacturing is contracting. Retail sales, excluding autos, have stalled. Consumer confidence is falling,” the report states. 

How can an possible recession be slowed? The Council of Foreign Relations said a U.S.-China trade deal, which would boost consumer confidence, is not looking like a possibility. 

“But all signs are that this is unlikely, given Chinese insistence that structural reforms are now off the table,” the report says. 

The Fed has already cut interest rates twice in 2019, with a possible third cut looming. Commentary from the Council of Foreign Relations said it would “likely take more than 175 basis points of easing to prevent it.” 

Questions surrounding a possible recession have been a major theme throughout most of 2019, with opinions divided on the topic. 

"This is going to be a much shorter recession than the last one," predicts George Ratiu, Senior Economist with realtor.com. "I don't think the next recession will be a repeat of 2008. ... The housing market is in a better position."

Additionally, the majority of economists and analysts believe the recession still has at least a year before it arrives. Just 2% of economists, strategists, academics, and policymakers believe a recession will start this year, according to a recent survey of more than 200 members of the National Association for Business Economics. 

Meanwhile, 38% believe one will begin in 2020, while 25% anticipate one starting in 2021. Fourteen percent expect it won't materialize until after 2021. 

About Author: Mike Albanese

Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.
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