Project Syndicate: Makings of a 2020 Recession

A global recession is anticipated in 2020, and Nouriel Roubini and Brunello Rosa suggest it could be severe. Fiscal-stimulus policies are unsustainable and contribute to overheating and inflation, which in turn drives up interest rates. US trade disputes with China, Europe, Mexico and Canada disrupt supply chains and contributes to slowed growth. Adding complications: a US crackdown on immigration and rejection of investment in renewables. Populism everywhere increases unsustainable debt. Prices of real estate and other investments are high, and the cost of credit is rising. A correction could lead to illiquidity risks, and a foreign policy crisis would compound global challenges. “Unlike in 2008, when governments had the policy tools needed to prevent a free fall, the policymakers who must confront the next downturn will have their hands tied while overall debt levels are higher than during the previous crisis,” the writers conclude. “When it comes, the next crisis and recession could be even more severe and prolonged than the last. “ – YaleGlobal