Economic Perspective: The Next Recession

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MARY WALDEN:

“Today’s program looks at the next recession. Mike, even though it ended nine years ago, the Great Recession is still having an impact on people. One way is our interest in anything that might suggest when the next recession will arrive. Are economists giving any forecasts?”

MIKE WALDEN:

“Well we are, and that’s one of the things we do is give forecasts. Now whether those forecasts turn out to be right or not is another matter. But we do have a major, new recession forecast that was just released from the National Association of Business Economists. As you might expect, that’s an association of economists who work in the business area. Some say they are much more in touch therefore with what’s happening in the economy.”

“And the survey showed that two-thirds of those members of that association who were surveyed predicted that the next recession would begin sometime in 2020. Now a minority of them said that it could begin maybe as early as the end of 2019, but anyway we’re not going to quibble over that.”

“It looks like most economists are thinking recession free this year, 2018, and maybe recession free for at least most of 2019, but 2020 possibly a recession. Now when I say, and when economists say recession, we don’t mean like the Great Recession. I mean that was one for the ages.”

“I think most economists now are looking at a modest recession, what I might call a run-of-the-mill recession, maybe the economy contracts by about one-half of one percent, maybe unemployment goes from roughly four percent now up to six or six and a half percent, and it would also be rather short lived, maybe six to nine months.”

“So that’s a forecast. I don’t know that anyone should do anything major because of that forecast. I do think though that business people in general though should have a plan that says to them when it’s apparent there’s a recession how are they going to respond, how are they going to protect themselves. I think that’s always advisable.”

Mike Walden is a William Neal Reynolds Distinguished Professor and Extension Economist in
the Department of Agricultural and Resource Economics at North Carolina State University who
teaches and writes on personal finance, economic outlook and public policy.