Economic Eclipse

Last summer, Pulsenomics asked an expert panel of economists, investment strategists, and real estate analysts to weigh-in with expectations re: the timing of, and likely triggers for, the next U.S. recession. In light of policy and financial market developments since then–including a spike in stock market volatility to levels about twice the record-lows recorded during 2017–we thought it would be interesting to revisit this topic with our panel. If the current economic expansion in the U.S. continues into the second half of next year, its duration will eclipse the 10-year record set by the 1990s boom.

Of the 114 experts who participated in the just-published Q2 2018 installment of The Zillow Home Price Expectations Survey, nearly 100 shared their latest thinking about the next economic downturn.

Only 4% of respondents believe now that the next U.S. recession will start sometime before 2019; when we posed this question to the panel less than one year ago, more than one-quarter of the experts–27 percent–said that the next U.S. recession would start sometime before 2019. Implication: expectations for an “economic eclipse” next year are high–and rising.

We also asked the experts to select and rank, in order of importance, up to three factors most likely to trigger the next recession.

Here are a few notable changes since last summer in the ranking of recession triggers that the experts consider most important:

• “Monetary policy” displaced “a geopolitical crisis” as #1 (the latter fell to #6)
• “Trade policy” is now #2 (previously #5)
• Although the rank of “stock market correction” was unchanged (#3), its score fell from 101 to 69.
• “Legislative gridlock” is #15, dead last; last summer, “political gridlock” was #4.