The recent trade war between the Americans and the Chinese has caused global economic fear to intensify, over the current health of the global economy and the looming recession. The American and Chinese tariffs have weakened and taken its toll on the global economy, but “the International Monetary Fund is far from forecasting a global recession” in the immediate future. The expected global economic outlook, released by the IMF, reflects the belief that the impending economic recession is questionable. Even though the international economy has remained relatively strong, there are questions over the long-term resilience of the current economy and how long this resilience can last. The International Monetary Fund has, also, noted that the tariffs imposed (or threatened) by “the United States and China could shave 0.8% off the global economic output by 2020,” with further economic losses expected in the future.
The trade wars which are looming could trigger a market correction instead of a full on recession. However, when considering other indicators of recession, such as the inverted yield curve, it is very possible a recession is looming. The general time frame for a recession after the yield curve inverts is between 6-24. This time frame coincides with economists' predictions of a recession occurring by the time of the 2020 presidential election.
ReplyDeleteThere are many professionals who are monitoring the economy and the data that is influencing their ideas about a recession occurring is the inverted yield curve. There are numerous economists who are stating that the inverted yield curve is misguiding and it is telling us nothing about the future. Currently, there is uncertainty with trading, however, the US has "lived" with trade uncertainty for years and there has been little economic impact.
ReplyDeleteIt appears that the United States is very aware of the potential for a recession and is taking steps to avoid an impending recession, such as lowering interest rates. As we discussed in class, investment is a huge player in causing recessions so by increasing investment by lowering interest rates hopefully they will be able to counteract the other indicators.
ReplyDeleteI feel like there are so many conflicting factors regarding a recession. On one hand we got a lot of evidence that "tells us" that a recession is coming, like the inverted yield curve. On the other hand however, we have economist assuring us that there is not a chance of a recession happening any time soon.
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