IS A RECESSION COMING TO AMERICA?

Written by Michael Thervil 

With American tariffs placed on so many countries around the world, one of the biggest drawbacks for America is that it is finding itself ever increasingly isolated when it comes to both geopolitics and when it comes to global trade. Now it looks like America may need to prepare itself for another form of a blowback and that would be a looming recession. Put quite frankly, if American businesses can’t sell their products at a rate that generates the necessary profits needed to run a business or industry, then the likelihood of a recession increases with each passing day. Currently America is facing a 60% chance of a recession occurring within the next 3 to 8 months.

With President Trump pausing the application of tariffs on imported items from countries external to America, that too creates add uncertainty the global trade markets and when their uncertainty in the global trade market, business make less products, hire less people, both of which has devastating adverse effects on the global economy because if people can’t find jobs, then people can’t work; and if people can't work then people can’t buy products. It’s a very simple economic process that has and will always reign true for as long as governments of nations dictate that this is the way things should be economically.

Another reason why America will find itself not only battling a new upcoming recession, but perpetually seems to find itself battling one every 4-7 years, is because America not only America borrows more than they spend, but America spends more than it takes in, and lastly, American business out of reasons of uncertainty aggressively saves its profits interests of investing their profits in the forms of payments and wages in hopes of more profitable conditions that will allow them to make more profits from the products, goods, and services that they sell. One of the biggest drivers of the next American recession are the Trump Administration's tariffs.

If it’s a high degree of uncertainty in the market that causes recessions in America, then it's safe to say the presidential election every 4 years also plays a role in why recession in America tends to happen as frequently as they do. To Americans, presidential elections are constitutionally celebrated, for the rest of the world it too is seen as a time of uncertainty. This is marked by a new administration's ability to change the predecessor's policies via congress and/or executive order. Oftentimes when American Presidents make abrupt political changes, they tend not to fully comprehend, ignore, or downplay the geopolitical and geoeconomic ramifications of their decisions and actions.

In doing so, it causes businesses within and external to America to become hesitant because of the buildup of uncertainty. This hurts America in the aspect that it looks unstable, unreliable, and thus untrustworthy in the global market. keep in mind that businesses don’t invest in places and things that they feel will not provide them with adequate ROI (Return On Investment). The more geopolitical and geoeconomic chaos that is created within a system, country, or in this case business sector, the less likely businesses will trust, invest, hire, produce, and sell products which only hurts the average man on the street. Welcome to the next American recession.