Wednesday, July 18, 2018
Business

Economists say recession threat looms for next president, whether it's Trump, Clinton or someone else

The last national recession smacked Florida so hard in so many ways, it's hard to believe that wrenching downturn officially ended way back in June 2009.

Seven years ago, almost. That's a long time between economic downswings. So long, in fact, that business chatter is rising fast over how soon the next recession will arrive, and how bad it might be.

A Wall Street Journal survey, unveiled Thursday, finds most economists think the country has a 20 percent chance of falling into recession in the next year. While 1-in-5 odds are far from a sure thing, the Journal says they are twice the odds quoted last September.

Here's a harder-edged forecast.

By 2017, this will be the third-longest (and one of the weakest) recovery without a recession since the Great Depression. At some point, it will run out of steam.

Private-equity billionaire David Rubenstein, who co-founded Carlyle Group, told Bloomberg TV this month that the next president will face a downturn in his or her first term.

"At some point in the next year or two or three, you can expect a recession," Rubenstein said. "We tend to have recessions every seven years, more or less, in the U.S. since World War II. It's inevitable at some point."

Donald Trump? Hillary Clinton? A Hail Mary candidate? It does not matter to Rubenstein who gets elected. As in the past, no president has much sway against economic cycles.

(That's one reason it's so laughable to hear Florida Gov. Rick Scott or White House officials claim personal credit for the dramatic national and state reductions in unemployment. They may have nudged the jobless rate a bit lower here and there but most of the increase in hiring was going to happen whether they were in office or not.)

There is a silver lining for Florida, however, should a recession strike, as so many economists and business leaders fear. A new Moody's Investors Service analysis suggests that of the four most populated states — California, Texas, Florida and New York — Florida is second only to Texas in its economic resources to weather a recession in the next two years. (See sidebar, inside back page.)

That's a far cry from 2006 when Florida's fast-bloating housing bubble burst, cutting home values nearly in half and destroying billions of dollars in home equity savings of millions of Floridians. Two years later, the financial collapse and stock market plunge turned bad economic times into a historical debacle.

That's not likely to be repeated in the next recession, but then the global economy is getting a lot harder to anticipate.

But whatever comes won't be pain-free, no matter what Moody's says about Florida.

"Odds are significantly better than 50-50 that we will have a recession within the next three years," former Treasury Secretary Lawrence Summers told Bloomberg.

"We're seven years into this expansion, so at some point we're going to have a downturn," Wells Fargo senior economist Mark Vitner told a California audience this week. "My general sense is the tide is beginning to go out. It doesn't mean a recession is right around the corner."

But it may be a block or two away.

Contact Robert Trigaux at r[email protected] Follow @venturetampabay and 'Like' the Robert Trigaux page on Facebook.

 
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