Worried About a Recession? Here’s When the Next Slump Will Hit
The next recession may be coming sooner than you think.
Eleven of the 31 economists recently surveyed by Bloomberg believed the American recession would hit in 2018, and all but two of them expected the recession to begin within the next five years.
If the recession begins in 2018, the expansion would have lasted nine years, making it the second-longest period of growth in U.S. history after the decade-long expansion that ended when the tech bubble burst in 2001. This average postwar expansion averages about five years.
The recent turmoil in the stock market and the slowdown in China has more investors and analysts using the “R-word,” but the economists surveyed by Bloomberg think we have a bit of time. They pegged the chance of recession over the next 12 months to just 10 percent.
Related: Stocks Are Sending a Recession Warning
While economists talk about the next official recession, many average Americans feel like they’re still climbing out of the last one. In a data brief released last week, the National Employment Law Project found that wages have declined since 2009 for most U.S. workers, when factoring in cost of living increases.
A full jobs recovery is at least two years away, according to an analysis by economist Elise Gould with the Economic Policy Institute. “Wage growth needs to be stronger—and consistently strong for a solid spell—before we can call this a healthy economy,” she wrote in a recent blog post.
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Deficit Hits $738.6 Billion in First 8 Months of Fiscal Year
The U.S. budget deficit grew to $738.6 billion in the first eight months of the current fiscal year – an increase of $206 billion, or 38.8%, over the deficit recorded during the same period a year earlier. Bloomberg’s Sarah McGregor notes that the big increase occurred despite a jump in tariff revenues, which have nearly doubled to $44.9 billion so far this fiscal year. But that increase, which contributed to an overall increase in revenues of 2.3%, was not enough to make up for the reduced revenues from the Republican tax cuts and a 9.3% increase in government spending.
Tweet of the Day: Revenues or Spending?
Rep. Kevin Brady (R-TX), ranking member of the House Ways and Means Committee and one of the authors of the 2017 Republican tax overhaul, told The Washington Post’s Heather Long Tuesday that the budget deficit is driven by excess spending, not a shortfall in revenues in the wake of the tax cuts. The Wall Street Journal’s Kate Davidson provided some inconvenient facts for Brady’s claim in a tweet, pointing out that government revenues as a share of GDP have fallen significantly since 2015, while spending has remained more or less constant.
Chart of the Day: The Decline in IRS Audits
Reviewing the recent annual report on tax statistics from the IRS, Robert Weinberger of the Tax Policy Center says it “tells a story of shrinking staff, fewer audits, and less customer service.” The agency had 22% fewer personnel in 2018 than it did in 2010, and its enforcement budget has fallen by nearly $1 billion, Weinberger writes. One obvious effect of the budget cuts has been a sharp reduction in the number of audits the agency has performed annually, which you can see in the chart below.
Number of the Day: $102 Million
President Trump’s golf playing has cost taxpayers $102 million in extra travel and security expenses, according to an analysis by the left-leaning HuffPost news site.
“The $102 million total to date spent on Trump’s presidential golfing represents 255 times the annual presidential salary he volunteered not to take. It is more than three times the cost of special counsel Robert Mueller’s investigation that Trump continually complains about. It would fund for six years the Special Olympics program that Trump’s proposed budget had originally cut to save money,” HuffPost’s S.V. Date writes.
Date says the White House did not respond to HuffPost’s requests for comment.
Americans See Tax-Paying as a Duty
The IRS may not be conducting audits like it used to, but according to the agency’s Data Book for 2018, most Americans still believe it’s not acceptable to cheat on your taxes. About 67% of respondents to an IRS opinion survey “completely agree” that it’s a civic duty to pay “a fair share of taxes,” and another 26% “mostly agree,” bringing the total in agreement to over 90%. Accounting Today says that attitude has been pretty consistent over the last decade.
