Next Recession Predictions: Is the Market Overdue for a Crash?

The U.S. stock market is arguably the backbone of the global economy. It makes up roughly 43% of the world stock market community.

However, history will show that the American stock market hasn’t always been the most stable. There was the stock market crash and Great Depression of 1929, the stock market crash of 1973-1974, Black Monday of 1987, the Dot-Com Bubble and subsequent burst of 2000, and the stock market crash and Great Recession of 2008.

While some tout that the market is doing better than it was a decade ago, there are growing concerns that the market is in deep trouble. As a matter of fact, some experts are already issuing warnings to investors.

So given the budding concerns and warnings, is there reason to believe the market is overdue for a crash? That the next recession is on the way? Keep reading and find out. 

Signs the Next Recession Will Happen in the Near Future

According to 49% of corporate CFOs, the world should be preparing for the next Great Recession to hit within the next 18 months. And there are several signs to suggest they may be right.

2018 Was a Dreadful Year for Stocks

Last year, many investors found themselves biting their nails in fear and frustration. The S&P 500 was down 6.2%, the Nasdaq fell 4%, and the Dow shrunk by 5.6%. It should be noted these numbers reflect the averages of the highs and lows.

At the market’s lowest point in December, the S&P was down 9% and the Dow 8.7%, something that hasn’t been seen since 1931.

Debts Aren’t Being Paid

Debt is definitely one of those four letter words that most people don’t want to mention. Yet the fact remains, it’s a real and dangerous concept when talking about the downturn of the economy.

Ten years ago during the Great Recession, the global debt was roughly $177 trillion. Today, that number has managed to get higher than $247 trillion.

Even on the smallest of micro levels, U.S. household debts have managed to get even worse than they were in 2008. Americans owe considerably more money in car loans, home loans, and credit card balances. 

Expert Forecasts

It’s certainly not a good sign that the International Monetary Fund, or the IMF, has lowered its initial world growth forecast for 2019. What was predicted to be 3.9% in July 2018, has recently been cut to 3.5%.

The World Bank has also issued some foreshadowing numbers. While the reputable organization claimed global economic growth would be 3% in 2018, it predicts growth will be even slower in 2019 at 2.9%. (The World Bank cites: “International trade and manufacturing activity have softened, trade tensions remain elevated, and some large emerging markets have experienced substantial financial market pressure.”)

The Final Verdict

By all accounts, the global economy does seem to be headed toward the next recession within the next two years. However, predictions are predictions because there is no certainty events will actually take place as those making the predictions envision. Things can happen in the next few months or years that shock the market in the most amazing of ways.

So there’s no need to stop investing in the stocks. On the contrary, there is still money to be made on the market as it is today. In fact, if you have questions about investing or the stock market, be sure to contact us.