The Next Recession Might Be Worse Than The Great Depression

Sharing is Caring!


When will the next recession start?

In search of the answer, I kept asking speakers on-stage and off-stage at the Strategic Investment Conference 2018. I also asked really smart people that are well-versed in economics and economic cycles.

Their consensus seemed to be 2019 or possibly as late as 2020. We have just stretched the rubber band too tightly, and it’s fraying. Consumer spending, the driver of the economy, is beginning to slow.

On top of that, consumers have accumulated about as much debt as they can tolerate. Savings are at a ridiculous low.

This is from Telmatica Research:

While Friday’s job report got the markets all excited, perhaps the reason that enthusiasm has cooled is folks are realizing that the 50,000 gain in retail jobs isn’t syncing up with the -4.4% SAAR decline in retail sales over the past three months. Then there is what we are hearing from the horses’ mouth. Walmart and Target both issued weak guidance, as did Kroger,  which also suffered from shrinking margins. A tight and tightening job market is unlikely to help with that. Costco missed on EPS, as did Dollar Tree, which also missed on EPS and gave weaker guidance. Big Lots saw a decline in same store sales. At the other end of the spectrum, the 70,000 gain in construction is in conflict with rising mortgage rates, traffic and declining pending home sales, while the 31,000 gain in manufacturing has to face a dollar that is no longer declining, high costs on tariff-related goods, and potentially some sort of trade war.

And do you think automobile manufacturers will be able to maintain their current high production when literally tens of millions of high-quality leased cars come off their leases in the next few years?

See also  Britain will now see 'permanent food shortages' and it's 'going to get worse'... Kroger: Grocery prices headed higher...

Not to mention the hit they’ll take from steel tariffs…

I know that many Americans support the steel tariffs. But it will come at a cost, which is a move to protectionism and trade wars. That would pretty much end economic progress as we know it and usher in a period similar to the Great Depression.


No one actually knows when a recession will start. People have opinions based on past performance and personal experience. The problem is that past performance is worthless in today’s world.

One thing I do know is that the Atlanta Fed’s GDPNow metric, which tries to predict GDP for the current quarter, has notably dropped in the last 45 days. Its Q1 GDP estimate has plunged from 5.4% growth to 1.8%.

See also  George Gammon: The US will fall into Depression in 2022 … Max Keiser: Zero interest rates are causing deflation …

Even my great friend Steve Moore admits that it will take multiple years of 3+% growth to get rid of the current deficit.


We are not seeing a monster increase in capital spending from these tax cuts, at least so far.

Worse, executives seem to be saying that they’re going to increase stock buybacks and dividends. And while I’m all for dividends, those typically don’t create jobs… and jobs are what we need.

I came away from my conference with my recession antenna up. Recessions don’t happen overnight. Things start slowing down and then they roll over.

Some of the attendees think the next recession will not be all that bad, while others think it will be worse than the Great Recession.

I think the outcome depends on the timing of the next recession and the political reaction.

Get a Bird’s-Eye View of the Economy with Thoughts from the Frontline


Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.