SEATTLE, Wash. — The next major recession may be just around the corner. A 2020 recession is emerging as the most likely timeframe.
Multiple surveys show that economic experts are predicting an early 2020 recession. It will be a period of economic decline, likely starting in the first quarter. About half of experts recently interviewed by Zillow predict as much. The Seattle-based real estate company reports the findings in its recent Zillow Home Price Expectations Survey.
Matthew Gardner, chief economist at Windermere Real Estate, told Seattle’s Morning News that a recession could begin at the end of 2019. He’s been warning people for more than a year.
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“Economic expansions never die of old age. So something is going to happen. It’s very cyclical. It will happen at some point or another. The question is when is it going to be? And not just when is it going to be, but what will cause it?”
Gardner says trade wars may be a driving cause of another recession. The posturing being done with Chinese President Xi Jinping right now is “not positive,” he says. Additionally, if the Federal Reserve starts raising interest rates too quickly, that could push us into a recession.
Other experts have said that monetary policy will be a primary trigger for the recession, unlike the 2008 downturn which was caused by the housing market. And while the first quarter was the most popular time cited as the start of the 2020 recession, other experts predict the next downturn could begin between 2019 and 2022.
Zillow's senior economist Aaron Terrazas told PR Newswire that "As we close in on the longest economic expansion this country has ever seen, meaningfully higher interest rates should eventually slow the frenetic pace of home value appreciation that we have seen over the past few years, a welcome respite for would-be buyers." He also said that while housing affordability is a major concern in every major city, another "housing market crisis is unlikely."
The Zillow findings are an echo of other surveys stating similar concerns. The Wall Street Journal also predicts 2020 as the start of the next recession. A total of 59 percent of economic experts told the journal that the current economic expansion will end around 2020; 22 percent said it will end in 2021, and a handful of others predict 2022 or later.
Scott Anderson, chief economist at Bank of the West, told the Wall Street Journal that the “current economic expansion is getting long in the tooth by historical standards.”
While Zillow’s findings report that monetary policy will be a chief contributor to the coming recession, the Journal reports that an “overheating economy” is the primary factor. This will lead to the “Fed tightening.”
The Journal also points out that recessions are difficult to predict and that two such predictions never materialized in 2011 and 2016.
University of Washington's Diana Pearce would call it "alligator economics." She told KIRO Radio's Dave Ross in October 2017 that Washington is heading toward a harsh economic bite. She argues, however, that affordability is becoming a major factor, especially around Seattle. She says that the graph of wages in the region are only going up slightly, yet costs of living are rising much more dramatically. Eventually, something has to snap.
Pearce made her statements following a recent self-sufficiency study for the Workforce Development Council for Seattle-King County.
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