What Will Cause The Next Recession?

Despite the widely-held view that consecutive quarters of GDP contraction are all that's required, recessions are defined ingloriously, and rather nebulously, by NBER as "a significant decline in economic activity spread across the economy, lasting more than a few months".

The committee places particular emphasis on two monthly measures of activity across the entire economy: (1) personal income less transfer payments, in real terms and (2) employment. In addition, we refer to two indicators with coverage primarily of manufacturing and goods: (3) industrial production and (4) the volume of sales of the manufacturing and wholesale-retail sectors adjusted for price changes. We also look at monthly estimates of real GDP such as those prepared by Macroeconomic Advisers.

However, recessions in real life are more like porn to the average joe; you know it when you see it (or experience it). And while growth, for now, remains positive - juiced by moar war spending, growing deficits, and tax cuts - it is slowing rather quickly (if judged by Atlanta Fed's guess)...

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And even more so if judged by the market's best guess...

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So - if a recession were to jump out from behind a bush tomorrow, shocking all asunder at the potential lack of central bank omnipotence after all - who would be to blame?

Simple - as with all things today - it depends who you ask...

If you ask the Financial Press, the next US recession will be sparked by a financial crisis induced by Fed rate hikes...

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Source: Goldman Sachs

However, if you ask the Twittersphere - a bastion of clear thinking - it is Trump...

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Source: Goldman Sachs

Even the President has used his Twitter influence to brag and cajole the markets...

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But President Trump has made it clear who he thinks is responsible (and notably he was clear on who was responsible before the plunge started)...

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Although the names Bernanke and Yellen are actually the real culprits for what is unwinding now.