What they addressed at the end of the article is the key point to me. There are reduced nations left to fuel the worlds economic engine in a recession. Previously events like 2008 we had India, Middle Eastern and Chinese economies doing massive development, so while the western countries went to recovery mode, the could benefit and hold themselves a bit better from these other nations growth.

Today if we hit a trade/financial crisis its likely to spread across the major global economies. African areas and India seem to have ongoing growth potential but I dont see them coming to the rescue.

And should a major economy like US have a crisis this could have a global impact compounded further by; 1) The massive global debts being accumulated at personal and state levels pretty much everywhere. This is setting ourselves up for potential contagious failure of our systems. Not just inter country finance but imagine there was significant defaults and how that would spread to pension funds and back into the economy. Small business lending etc. Our globalised and finance heavy economies dont have adequate circuit breakers. Further 2) I suspect developed nations urbanisation will make any significant downturn harder on the masses than previous recessions. In the 1920's you had 30%+ of people on farms. Now you have something like 2%. Back then people could more easily tighten belts and become increasingly self sufficient over a few hard years. Today it would be a significantly more difficult position for the government to manage, both by volume of people that would need full support and back to their indebtedness. This could spell real trouble if the wheels fall off. And given history, the wheels will fall off occasionally.

Anyway, I'm not trying to scare or convince people to buy bunkers. I do feel we should demand better long term governance from politicians vs this 'whats gets me in next term' politics we see today. With the tribalism and instant gratification of today's politics it doesn't seem to offer the best hope. But really who knows...

The U.S. has gotten progressively worse and worse at handling recessions, and yes, it's in no spot to handle the next one.

But this is nothing new. It's been heading this way for a long time. You could have ran this same article a year ago before the current administration took over.

I don't want to mention politics, but politics plays a big role here. When your party is in power, life is good and spending is easy. When your party is out of power, hard times are coming and we should prepare.

The state of the nation doesn't flip around that quickly. Instead it's all about long-term trends like debt and interest rates. But by viewing all public policy through a partisan lens, it allows folks to always blame the "other guys".

It is a dysfunctional political system that's led to a dysfunctional financial system. I think the U.S. might have another decade or two, but one day, being the world's reserve currency ain't going to cut it any more. That day is going to suck.

At the current pace of rate rise and the announced pace of withdrawal of QE, it's going more than 5 years before the monetary policy returns to normal. I doubt the current cycle will last that much longer. That will leave the Fed with little tools to react, other than even more QE.

This comment identifies parties responsible for actions, but these actions are taken by democrats and republicans alike, no president in my life time has failed to engage in these practices. This is not a political response.

Recessions are not "just how economies work". Recessions and depressions are the product of the monetary shenanigans of the central bank, as laid out well in the Austrians Business Cycle Theory. The short overview is, easy money means government gets to spend and the money creation process includes showering those at the top - wall street banks and government connected entities-- with new money that they are expected to "invest" in the economy. The problem is this is malinvestment and distorts the markets.

You can only do it so long and you invariably create bubbles.

A recent example of this I have lived thru is the dotcom boom...when it went bust, interest rates were put below the cost of money, and banks were mandated to make bad loans (prudent underwriting of loans was considered "racist" by democrats in the late 1990s so CRA was changed, later analysis showed it wasn't correlated with race after all.) Then under Bush the spigots were really opened and suddenly you have very cheap money to buy houses with.

Buying a house with cheap federal reserve money was a form of the carry trade--- where you buy an asset worth X and then pay it back with increasingly lowered value dollars.

This resulted in the housing bubble and of course the housing crisis.... which was "fixed" with massive amounts of even more easy money. This money is now going into wall street again, this time into equities, and hedge funds and venture capital.

It will eventually bust again.

IF you don't have an easy money policy then interest rates follow the supply demand dynamics of a market, and it will self regulate. Even if you don't think it will perfectly regulate itself (and that's true) it will tend to, rather than get way out of whack.

What we have now is an economy that is has gotten so out of whack and never been able to properly recover itself by unwinding the last two bubbles.

It seems like the main takeaway here is "the social safety net has been deliberately weakened, and now in a downturn people will be more hurt." Well, yes, but in some sense that's the point of weakening the social safety net.

Isn't prepared to do what exactly?

Does The Atlantic think people are just going to lay down and die when it comes?

People will deal with it the way they always have of course, by modifying their behaviors to align with current financial realities.

I really don't understand the point of article like this.

It's all riding on the faith of the rest of the world in the US. Watch the USD. Once it plunges, it's over. Won't be able to print money anymore. Until then they can print away a lot of problems.

Doesn't a recession happening mean we were unprepared?

If we were prepared to handle it, wouldn't we, and then avoid it?

the stimulus they claim is not wanton spending by the Federal government but transfer payments. Those include extensions of unemployment, food stamps, and other assistance programs. It also includes, contrary to how we think but government thinks, tax rate cuts and tax holidays.

the real threat isn't the US still, it is that Europe still is more likely to tip and negative interest rates over there are a serious drag. Just ask Japan how long the malaise was because of bad fiscal policy and attempts to prop up on government money was

Here's an intersting question; Would an economic recession be a boost for Bitcoin, or would it be dragged down?

My intuition tells me that Bitcoin would see a surge, as it becomes a stronger pillar of monetary value that crosses country borders, similar to the dollar, but not tied to the US.

Why don't we just flag this article too along with all the others, if it's too unpleasant to think about?

what will happen to bitcoin in recession?

Lol... Like we were prepared for the last one

The doomsday articles should be taken with a pinch of salt. Economy by itself has a very good recuperative power because people like to trade and get themselves into better situation.

The real thing that worries me more about recession is that a person like Trump might simply try to "fix it" and in the process claiming more power to himself which will make things worse. It is undeniable that Bush's "fix terrorism" and Obama's "fix economy" has proved to be a disaster to both safety and economy.