EDITOR: The next recession is taking shape – a student debt crisis, high corporate debt, an unstable stock market, worsening trade war, weak GDP growth, and rising economic inequality.
In the year 2019, the fundamentals of the economy are not strong. Post-Great Recession financial regulations have been scaled back, or simply revoked, by the Trump Administration. The student loan debt crisis has continued to worsen without much-needed intervention. Economic inequality is worsening. The gap between the very wealthy and the middle-class has grown. These are concerns which have mounted, but remain unaddressed by a broken political culture, resulting in economic malfeasance.
While all of these economic indicators are reason to believe that a recession is on the horizon, there is also considerable concern that the United States is poorly equipped to confront a downturn when it arrives. Income inequality continues to be an unaddressed concern that has only worsened with the passage of the tax reform bill, deregulation, and the dismantling of rules by the Consumer Financial Protection Bureau (CFPB). America’s 44.2 million student loan borrowers are $1.5 trillion in debt, which has delayed spending on mortgages, having children, and investing in retirement. This has lead to economic instability and leaves young people poorly equipped to weather economic downturns. Older Americans also find themselves vulnerable to a potential recession, challenged by weakening public pensions, housing and healthcare shortages, and financial insecurity. These generational challenges have been tracked by economists for decades, but policy inaction by a hyper-partisan, divided political class has prevented solutions-oriented government from taking shape to address these challenges.
The math indicates that economic growth will continue to slow over the next year and that the United States may enter a recession within the next few years- an escalating trade war with China would accelerate that timeline. Worsening these economic realities, public policy achievements by the Trump Administration have not addressed core policy challenges. The tax reform package, without bipartisan input, hasn’t reduced income inequality or wage growth stagnation. Additionally, in recent years, the Republican-controlled U.S. Senate refuses to hear bills passed by the Democratic-controlled U.S. House. Refusing to have a conversation about policy proposals because they were brought up by “the other side” is petty and reflects a political culture built on partisanship, not a culture focused on solutions to challenges.
A core reason we’re facing down another potential recession and we’re poorly equipped to confront it is political. The politics of the day has hamstrung the federal government through austerity measures causing muted economic growth. Politics has caused the scaling back of good regulatory rules to protect consumers and limit financial industry speculation. Politics has delayed addressing significant challenges like the student loan debt crisis, global climate change, structural racism, strengthening social programs, improving healthcare attainability and affordability, and addressing dangerous levels of income inequality.
The next recession can be predicted based on macro-economic trends, data, and current events. The cause isn’t unpredictable changes to the economy or market fluctuations, rather, the root of the problem is a gargantuan list of unaddressed policy topics compiled by a political culture embroiled in partisan gridlock. We’ve stopped rewarding politicians for accomplishments and started rewarding talking points and cheap political shots. Our political culture and our quality of life will improve when we reward those in office who enter public service to serve the public. There is hope if we’re willing to pay attention, engage, and vote.
— Eric Clarke, Denver via [email protected]