In light of today’s big event, it is worth discussing what the winner will be faced with in the White House. There are two possible scenarios when looking at the movement of the economy- they will either face a recession in office, or have the longest economic expansion in US. History.
Although the ladder seems quite more appealing, economists predict that the likelihood of a recession in the next four years at 60%
You might be thinking if we know a recession is likely to come – how can we prevent it? The problem is that there are a number of various factors or mistakes that could knock the economy off its upward path, some of them hard to track or prepare for. It could result from a policy mistake by the Federal Reserve, inflation, reduced real wages, or higher interest rates.
This expansion streak started in June 2009 and has continued for almost 89 months, but is important to note that the length of an expansion doesn’t correlate with its resilience.
It is forecasted that the economic policies of the president we elect today to be extremely uncertain, by an 85% to 15% margin.
Economist Nick Timiraos brings up the differing views both candidates have,
“The Democratic nominee characterized the economy as improving—and nearing a turn toward breakout growth—from the past decade’s financial crisis and housing bust. Her Republican rival saw no such recovery. He described a country in steep decline, with aging infrastructure and jobs by the thousands flowing to Mexico and China.”
Regardless of the differing views, the numbers speak for themselves with the unemployment rate below 5%, gas prices lower than $2.50, and recovering home prices. But economic growth hasn’t taken off to its full potential, with global central banks holding rates near zero to boost borrowing and consumption.
By being aware and cautious of the cyclical nature and current state of the economy, we can prepare ourselves for the worst-case scenario, of a recession, that only a quarter of economists place the odds on below 50%.