If a recession hits next year, it would probably be mild. But a recovery would also be tame – By Paul Davidson (USA Today) / Dec 30 2019
The odds of the U.S. slipping into a recession in 2020 are getting longer.
The probability of a downturn has fallen to about 1 in 3 following a tentative trade war truce with China and a resilient job market. But that doesn’t mean there won’t be one.
Here’s the good news: Economists believe a recession that starts next year would probably be relatively short and mild – more like the slumps of the early 1990s and early 2000s than the devastating collapse that led to nearly 9 million job losses during the Great Recession of 2007-09.
That’s largely because consumer finances are in good shape and there’s little sign of the excesses – like runaway inflation or housing or stock market bubbles – that triggered previous slides.
“The balance sheets of households, businesses and banks remain strong,” says Cristian deRitis, deputy chief economist at Moody’s Analytics. “We have the capacity to absorb a recession, restructure and see growth recover.”
Think of the 10½-year-old economic expansion as a slow but steady jogger who gradually stumbles to a halt in the latter stages of a marathon but can quickly resume the race after a brief rest. By contrast, the mid-2000s economy that ended with the Great Recession was a sprinter who burned out and crashed.
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