What Could Trigger the Next Recession?
March 9, 2020
Fears around the spread of coronavirus and its impact on the global economy have investors worried. Some are concerned that the impact could push the economy into a recession. One problem with recessions is that we often don’t realize we are in one until months later. To that end, Bank of America has created a watchlist of potential events that will signal a recession.
The potential triggers include:
- American consumer strength waning
- Unemployment claims increasing above 250,000
- Lower mortgage activity
- Small business confidence falling below 100
The good news is that none of these look imminent. Consumer confidence increased, albeit less than expected, last month. Unemployment claims fell by 3,000 last week to a seasonally adjusted 216,000. Small business confidence currently sits at 104.3
Failing to meet the triggers provided by Bank of America will not necessarily prevent a recession, just as meeting one or all will not mean a recession is unavoidable. However, they serve as a good proxy for the overall economy, and they currently show the economy’s resilience.