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Comment by bhouston | Hacker News Reader

I do worry that this is the end of the current bull market and we'll be entered into a recession in the next half year or so.

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Stock market corrections do not always lead to or cause a recession (or vice versa). Many Americans do not even own stocks, so something like today will be a passing news item barely noticed.

If you think a recession is coming, what will be the trigger(s)? Right now companies are making money, wages are finally growing, and jobless claims are near what some would say is full employment. The only real euphoria I see is in crypto, and I just don't see a problem there being able to spread economy wide like what happened in housing.

>If you think a recession is coming, what will be the trigger(s)?

Not in the immediate timeframe, but there are some potential breakers looming out there that have potential to hit in the next year or three.

The first is inflation, and the fact that we just pulled a massive tax cut. This will probably lead to stock buybacks, throwing gasoline onto the already booming economy. Usually it's best to save the cuts for busts, to stimulate growth. Now it's like throwing that third fuel pack into the train engine on Back to the Future III.

The second is the education bubble. The wealth gap is slowly but steadily growing for the current generation, and student loans are a strong cause. This is more insidious because you're turning out a generation with decreased buying power that they won't recover from without intervention. Depending on the method of the intervention, it could lead to debt disappearing which will cause another recession.

Lastly is the housing bubble. It busted in some areas but is still booming in others, thanks to no financial reform to prevent it from happening again. This alone won't be a large enough factor to trigger another recession, but could when combined with another smaller cause, like inflation. The fed has moved up the interest rate increase schedule because it's becoming obvious that we're looking at signals pointing to increases in inflation.

I recall hearing about a subprime auto loan bubble too.

1) Increase in interest rates.

2) Cut in discretionary spending in order to pay for the tax cuts. This in turn then slows the economy down.

Many Americans have a 401k.

These 401k plans buy a mutual fund, which buys stocks. So indirectly, these people own the stock.

Recessions are technically at the minimum 9 months, three quarters of negative growth

Edit: it's two quarters as pointed out below

Recessions in the US are almost universally defined as being at least two consecutive quarters of economic contraction / negative GDP.

https://www.investopedia.com/terms/r/recession.asp

Yes you are right.

Recessions in the US are defined by NBER, and while they usually include two consecutive quarters of GDP contraction, that is not always the case, and it certainly is not the definition (as GDP is not the only factor considered.)

Notably, the 2001 recession did not include two consecutive quarters of GDP contraction, and while the 2007-2009 did include more than two consecutive quarters of GDP decline, they weren't at the beginning of the recession.

http://www.nber.org/cycles/recessions_faq.html

I said enter into. You only find out when the recession started 6 months after it has begun. So what I said is completely feasible.

There is no way we enter a recession this year unless something comes out of left field. Interviews with hundreds of economists and they think this is the least likely year to have a recession in history. Gdp is not going to drop due to the tax cuts. The cuts might cause problems in a few years but you have to realize marker doesn't correlate with the economy. In fact it's dropping because the economy is picking up steam causing interest rates to rise.

> Interviews with hundreds of economists and they think this is the least likely year to have a recession in history...

user furiously shorts the entire economy

lol. seriously. When has there ever been a recession that all economists predicted the months before it happened?

>There is no way we enter a recession this year unless something comes out of left field.

This is more likely because Trump won the presidency. It's why I'm staying cash until Mueller is done unless we see a few more pints of blood on Wall Street in the next few weeks.

Your worry is valid, however even bull markets have pullbacks. We haven't seen a real one in a while so naturally this is going to be bigger.

Investor sentiment from what I've seen has been that the tax cuts pushed the next recession to around 12 months from now. So I doubt this is that crash.

It's practically guaranteed, unless the Fed rapidly adjusts back to being accomodating by slashing rates.

The sugar high from the tax cuts will buy a few quarters of time at best.

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