Opinion | A Smorgasbord Recession? (Wonkish) – by Paul Krugman – The New York Times

“The 2008 financial crisis is (duh) a decade in the past; employment has been growing steadily since early 2010. Since nothing is forever, and proclamations that the business cycle is over have always ended in embarrassment, lots of people are looking for the sources of the next recession.

The thing is, there’s nothing out there as obvious as the housing bubble of the mid-2000s, or even the tech bubble of the late 1990s. So here’s my thought: maybe the next recession won’t be caused by one big shock but instead by the combined impact of several smaller shocks. There are arguably several mid-sized bubbles out there, from private equity debt to emerging markets. Stocks are priced as if there’s no risk despite omens of trade war, consumer confidence similarly seems to discount dangers. There’s probably other stuff I’m missing.

The point, anyway, is that we might be looking at a smorgasbord recession, one that involves a mix of smallish things rather than a single dominant item. And there’s a model for that kind of recession: the slump of the early 1990s.”

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s