Worcester Business Journal

wbjournal.com | September 16, 2019 | Worcester Business Journal 13 Recession is coming The U.S. is in the midst of the longest period of economic growth in its history. As warning signs of a recession pop up – less foreign investment in U.S. commercial real estate, insiders selling off stock – concerns are rising the economy may soon downshift. When polled online, the majority of WBJ readers believe the country will hit a recession by 2021. F L AS H P O L L Do you think the U.S. is headed toward a recession in the next 12-18 months? "The mainstream media is trying to make us believe that we are headed towards a recession." Comments Yes 56% No 44% F O C U S W LOANS: Whether you're looking for a Commercial Real Estate Loan, Term Loan or a Business Line of Credit, IC can help you move forward. Call Bruce at 978-353-1331 Bruce Mathieu Senior Vice President Business Development Officer Intelligent BUSINESS Solutions Start here! Info: ICCreditUnion.org or businessbanking@iccreditunion.com Federally Insured by NCUA Like, Friend or Follow Us Mass. business confidence The broader picture Today's economic expansion is the country's longest on record, but economists will oen say that alone is not a reason to expect a recession. Still, a recession at some point is inevitable, and experts have been scouring reports to see when the next one might come. "Nothing goes up forever, and it's very natural for the market and the economy to go in cycles," Steve Ng, a Clark pro- fessor and investment banker. "It's not good nor bad, it's just very normal." e trade war with China regularly makes headlines with eye-popping numbers of the valuation of products being subject – or threatened to be – to tariffs. But the trade war isn't enough in itself to spur a recession, said Smriti Rao, an economics professor at As- sumption College in Worcester. e stock market itself might not be a great indicator of the likelihood of a recession either, Rao said, calling job numbers a better indicator. "I don't think of the stock market as a particularly good indicator of economic health," she said. Nationally, most economists expect the U.S. economy to dip into a recession by 2021, if not sooner. In a survey of more than 200 econ- omists by the National Association of Business Economics, 72% predicted 2020 or 2021 for entering a recession. Two out of five predicted a recession by the end of 2020 or sooner. Most economists – 83% – said they expect global economic growth in 2019 to be slower than last year's rate of 3.6%. ose questions were asked before new tariffs went into effect Sept. 1, prior to the Federal Reserve's latest rate cut, and before the inverted yield curve passed its threshold show investors had more confidence in the economy in the long run than short term. e yield curve has predicted reces- sions before, and Ng said anyone would have to provide a strong reason to think it wouldn't be the case again this time. "It could or could not be different, but as an investor, I'm very alarmed," he said. If others are worried, they're not exactly showing it yet: the Dow Jones Industrial Average is up since mid-Au- gust, when the market initially tanked but then recovered aer the inverted yield flashed a warning sign. Still, a broad look at other indicators shows at least some cause for concern. ey join a group of even more wide- spread complicating factors, from the federal debt to Brexit to stagnant wages not keeping up with housing, health care, college loans and other costs. e American economy grew at a 2.1% annual rate in the second quarter, the second lowest rate in three years, the U.S. Bureau of Economic Analysis reported in numbers revised Aug. 29. Residential investment fell for the sixth straight quarter, gross private domestic investment fell by the highest rate in at least three years, and exports fell by a 5.8% annualized rate. In manufacturing, August showed declines in new orders, production and employment, while a composite index of those and other trends was negative for the first time in 35 months, according to the Institute for Supply Management. As for consumers, their spending has carried the economy but that may be running out of steam, too. A consumer confidence index published in August by the University of Michigan posted its sharpest monthly decline since December 2012. Confidence hit the lowest level in nearly three years. 0 10 20 30 40 50 60 70 A S O N D J F M A M J J A 2018 2019 Confidence level Source: Associated Industries of Massachusetts

• Cover