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So right now people seem pretty worried about the US economy (yes, we still have one, in theory). AI is starting to hit predictable skids, data centers are both annoying people and not completing as fast as claimed, Iran hasn’t met a Strait they didn’t want to shut down, and so on. A lot of people are predicting some kind of crash of the stock market and the US economy.
Now I have my concerns on that, which perhaps I’ll share another time. But having been through many an economic crisis since being born in the late 60s, I have another concern – the recovery from a likely crash or severe downturn.
Namely, my concern is that there won’t be one like we’re used to. There may not really be one to speak of.
Recoveries take awhile. The 2008 crisis took five years for the stock market to recover – and the stock market isn’t the economy. The history of the 2008 crisis and its many year followup is wild, and I’m sure we all know people who didn’t recover or didn’t live long enough to recover.
This is where I get concerned about the next US downturn, which is almost certainly coming. I don’t think we’ll have the kind of recovery we’re used to, and it may be a dismal slog after a “new normal.”
Here’s why:
First, our position in the world is shot. We’re losing allies who are bypassing us for defense, technology, trade, etc. We won’t come back as fast as long as other people don’t trust us.
Second, the Iran situation has long-term impacts from the rearrangement of trade to affecting growing cycles due to fertilizer shipments. Will iran keep blockading the Strait of Hormuz (and possibly the Red Sea)? If Iran does regulate traffic under some agreement, the throughput won’t be the same. If Iran just opens up there’s still months of securing the area and clearing mines. The impacts will have repercussions for years.
Third, it’s pretty clear our stock market is propped up on a few big players. Any of those take a hit and who replaces them? For that matter, who might try to replace them and inflate values – only to make mini-crashes.
Fourth, a lot of Americans have been on the edge for awhile. They won’t have a recovery if there’s not enough to recover with. Young people already facing enormous headwinds won’t be able to get going.
Fifth, in no way do I trust our current government to do any kind of effective bailout – corrupt or otherwise! I mean I trust corrupt, but not effective. I have big problems with the money games played in response to 2008, not enough people went to jail, and we needed companies to fail while PEOPLE got supported. But there was at least some effort made – though I expect a few ham-handed efforts to keep things going.
Sixth, and finally, the US is going backwards. Science has taken a hit. We’re stuck in oil (and the people profiting from it) while the rest of the world heads for solar and wind. China and Europe are doing their thing. We’re the past.
So whatever economic crash we may see, I think the real issue will be the recovery won’t be so great. There may be no recovery to speak of, just a new normal of slower growth and less opportunities. I keep hearing Stagflation invoked, which is a flashback to my childhood and worrisome.
Sometimes it’s not the crash, it’s the recovery. And that’s where I’m even more concerned.
Steven Savage