A Global Recession in 2020 is Coming
Economists and stock market analysts have all been supposing this long extended cycle since 2008 would come to an end in 2020. Here’s why I think they are right.
I agree with Morgan Stanley’s recent note on Sunday, June 2nd, that the tariffs on China could lead to a global recession possibly as early as the end of 2019, but most likely in early 2020.
After a bearish end to May, 2019 investors are starting to understand the threat posed by the U.S.-China trade war, which could send the global economy into recession in less than a year (Morgan Stanley).
A Morgan Stanley Warning
Chief Economist Chetan Ahya warns of the impact to the global economy of the Tech Cold Wars. Ahya noted that the outcome of the trade war at the moment “is highly uncertain” but warned that if the U.S. follows through with 25% tariffs on the additional Chinese imports, it could lead to a recession in as few as three quarters.
The way Donald Trump is going he’s antagonizing China and it could be a disaster for the global economy, as China is one of its main drivers as of 2019. Black listing Huawei might be bad for innovation and not just be protecting American interests in their losing bid to be competitive in 5G.
Consumer sentiment in Retail in the Spring of 2019 is a huge warning sign for the global economy. Apparel retail earnings haven’t been this bad since the great recession of 2008.
The Economic Costs of a Trade War
Tariffs on China show America’s desperation to remain the sole super power in a world where decades from now or sooner they will be replaced. Trump’s show of force on the environment and trade is so out of step with the world Millennials and Gen Z have inherited, it means the internet is likely to become a regime of some kind in retaliation.
President Donald Trump last month raised the tariffs on $200 billion worth of Chinese goods from 10% to 25%. U.S. officials have also threatened to impose tariffs on $300 billion in remaining Chinese imports. This is spurring global recession fears and I’m among them, I think this could be what tips us into the brink of a global recession. Usually these things come once every 6 or 7 years in the U.S. but now it’s been 11 years and we are due.
The Year 2020 is Circled on our Calendars
An economic slowdown in early 2020 could hamstring Trump’s electoral chances. Trump knows this and has been manipulating Wall Street with tweets but the world is starting to get tired of it. Social media hasn’t just been weaponized, it’s become a kind of game for people in power. We’ve seen this with everyone from Donald Trump to Elon Musk. Twitter even banned Chinese protesters supporting human rights as the anniversary of one of China’s darkest days is coming.
Trump has campaigned on boosting growth and lowering unemployment and made his deal-making abilities a signature aspect of his 2016 campaign. American voters head to the the polls in November of next year. But what kind of economy will it be in that climate where a trade war won’t likely have a resolution any time in the near future?
Talks between the U.S. and China have stalled as the world’s two largest economies trade rhetorical barbs and punishing tit-for-tat economic measures, essentially blaming each other for failed talks. It wasn’t Trump’s plan to ever have the talks succeed in the first place, but instead to cause China economic pain in retaliation for their intellectual property theft. The power games mean we’re definitely heading towards a global recession, the only question remaining is how soon.