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Home / Business / Here's why the next recession may be different from what the US has ever seen

Here's why the next recession may be different from what the US has ever seen



  • As a trepidation of possible economic downturns, Goldman Sachs finds that the five traditional catalysts for melting are kept in check.
  • However, Goldman recently identified an unprecedented scenario that could make the next US recession unlike anyone in history. And it says that the odds are climbing.

As screams of a threatening recession ring higher, investors have blamed the economic landscape for some signs when the very next breakdown will happen.

Whether it means seeing the yield curve, consumer confidence readings, or other various economic emotional indicators, it's not denied it is on people's minds. And it has them scared.

Fortunately for those who feel insecure, Goldman Sachs has looked at the matter. The firm began by looking at what it was found to be the five primary driving forces behind setbacks throughout history: (1) industrial shocks, (2) oil shots, (3) inflationary overheating leading to aggressive interest rate increases, (4) economic imbalances, and (5) fiscal tightening.

Here's where the twist comes: Goldman says none of these five red flags are particularly worrying at the moment. So what does that mean for the current situation?

To answer that question, Goldman has considered something novel – a possible low-energy catalyst that has no historical record to cause economic downturn. They are looking at the possibility of slowing global growth into the US.

If it sounds far behind you, it is because – recently – it was. [19659000]

Related: Real characters Signs We are in a recession

23 PHOTO

Real-Sign Signs We are in a Recession

See Gallery

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Are we in a recession? Officially, it is up to an ideal group of economists at the National Bureau of Economic Research to decide. While their statement is based on facts and figures, we took a more "average joe" approach to determine if we are already in the middle of the big "R."

Our bloggers spied more than 20 new trends in everyday life that seem to say we are. Click on our gallery to see what they see.
Feedback Sign Overview

First Up: Recession Sign No. 1

Thieves have taken to remove catalytic converters, helping to control emissions, from the bottom of parked vehicles . The inverters contain traces of platinum and rhodium – which go for around $ 2,054 and $ 9,278 per ounce, respectively – and can be sold on the black market for a few hundred dollars each. However, victims pay much more than spare parts.
Which vehicles are hardest hit

Next: Reverse signal # 2

Who better to weigh in on consumer behavior than the people who work in the stores. For example, a Merchandiser working in a Maryland Target has noticed that she has fewer items for the screens she manages, and that retail traffic has been significantly smaller since the holidays. She says there don't seem to be as many people acting and moving less merchandise.

Next: Backstage sign # 3

Costco is one of the few dealers who do it pretty well these days. Why? As Americans continue to worry about the rising cost of food, more are eventually biting and joining wholesale clubs, such as Costco. Case in point: WalletPop.com blogger Amey Stone recently jumped on wholesale bandwagon. She says, "No matter how secure my husband and I feel in our own jobs, we see increasing job security around us. Because of this backdrop, I decided it was worth paying $ 50 to join the Costco club." [19659016] More about Costco Effect
Next: Return sign no. 4

Even with weddings, people are increasingly seeing their pennies. They reserve the case in off-peak times and reduce the number of guests they invite, according to the National Association of Catering Executives. People are also increasingly negotiating with catering companies to keep costs low without sacrificing the pump of what should be once in their lives. For example, don't be surprised if you go to an otherwise lavish wedding this year without a Viennese table, a selection of desserts served at the end of an affair. Next: Feedback Sign No. 5

Planning to tap the links this summer? You don't have to worry so much about bumping into other golfers because there are fewer of them. According to The New York Times, people with sports are leaving droves, partly because of financial reasons, such as companies that cut back on national club membership. This has happened despite the popularity of Tiger Woods.

Next: Recession Sign No. 6

The automotive industry, which is already hurting, is trying to convince buyers to jump into a new car with many incentives. That's because retailers are desperate as thousands of Americans decide to postpone the purchase of a new car this year.
$ 1K Monthly for the Minivan ??

Next: Withdrawal signal No. 7

Getting a reservation at the favorite restaurant has become much easier in the past – too easy to taste by the owners of eateries. The sale is down to chains that range from Red Lobster to Ruth's Chris Steakhouse.

Anecdotalt was one of AOL Money & Finance editors recently able to get immediate seating at the Cheesecake Factory in Sterling, Va. on a Thursday night. Previously, the wait had always been more than an hour.

Next: Reverse signal no. 8

Move over spoiled chef and Mary Kay, "gold party" services come to town. Companies such as My Gold Party and Gold Party of ADI have sprung up offers to help convert their friend's gold into cash, either by delivering you (for a fee) with equipment and training to Do it yourself reviews or by sending a representative to your home who will set up a store in your kitchen.
More about This Gold Party

Next: Feedback Sign No. 9

The National Federation of Independent Businesses (NFIB) reports in March that the Small Business Optimism Index is at its lowest point since the second quarter 1980. Companies complain that increased sales prices do not keep up with overhead inflationary pressures. Almost a quarter indicated that they increased the employee compensation by a margin that exceeded the profitability increase. Headlines abound by popular retailers who knock down some (or all!) Of their stores: Home Depot, Sharper Image and many others. Losing Competitors
Next: Feedback Sign No. 10

Repo men have some enviable career right now. Newspapers around the country have published stories of local repos in dollars, taking most of vehicles, from cars to motorhomes and motorcycles to motorboats. According to KHOU, a Houston TV news station, 1.5 million cars, was taken back last year, an increase of 15 percent from 2006. 2008 is expected to jump 10 percent from 2007
More about Repo Men Rewards

Next: Reverse Signal No. 11

Nationwide, Americans pay about $ 5 billion a year to borrow more than $ 40 billion from payers. Even those who know what a bad deal these types of interest rates are, are not immune to them today. WalletPop blogger Geoff Williams had never planned to go into the foot of a payday lending business … until this year.
My first payday loan

Next: Reverse Signal # 12

Walletpop blogger Josh Smith Shares this story: One of my friends is responsible for marketing in a nearby mall and working closely with their children's program. The program provides fun activities for children, where the parents can either put on a tiara or spend time shopping without a junior in tow. Although the event is vacant, there has been a drastic decline due to the lack of incentive to use the free kindergarten provided by the events. In short, parents don't need their children looked at because they don't have the money to shop. Few children need care
Next: Recession Sign No. 13

According to frequent sports event and concert-goer Josh Smith eats $ 100 plus dinner at a show or baseball game while food and gas prices rise, seems relentless. This year, he and his wife missed the entire season of their favorite minor league hockey team and continued to see one of their favorite comedians.
What should he do instead?

Next: Return Sign No. 14

There is a growing movement of small businesses to compensate for falling sales by adding new business products. For example, blogger Tobias Bucknell accepts that Dojo in his hometown has added a new side trade to martial arts: balloons. In Tom Barlow's neighborhood, the local model shop now also banners.
Strange Combo Ideas

Next: Withdrawal Signal # 15

Picture this, Store Brothers: A woman in a late model Mercedes parks next to you and walks into your favorite store store. What happens, you wonder, not a little extent of the sight of a seemingly wealthy community member using "your" affordable consumables. What happens here is an over-strap belt tension. As the economy loses steam, people fear the jobs, and the house cash machine dries up, people look at all the ways they can save. Frugality has suddenly become "in". More about this Thrift Store Trend
Next: Recession Sign No. 16

Many people cancel or dramatically change discretionary travel these days. With the ever-shrinking dollar, travel for fun and enjoyment has fallen far down the list of splurges for many middle-class families. Petrol prices, groceries, utilities, renters, daily living costs take a bigger sum out of our budgets.
& [39459031] More about Travel Trimming Trends

Next: Backslash No. 17

If you have a couple of children enrolled for four to six weeks, as many as summer, summer camps can set you back more than $ 10,000. WalletPop blogger Michelle Turk spent $ 3,000 last year, but not this year. She plans to either skip the whole camp or find famous camps that are a few hundred dollars versus a few thousand.
& [39] Summer Camp Striking Shock

Next: Feedback Sign No. 18

Another place that parents like WalletPop blogger Sarah Gilbert avoids in these cash-crunched times is the local zoo. And no, it's not because of the price of admission. There are treats standing at every turn that have kids shouting "gimme" and mother pruning $ 20 for non-nutritious rubbish.
Why the Zoo Is Out

Next: Reverse Signal No. 19

Blogger Tom Barlow has a favorite coffee shop. However, it has changed in recent months. More often, former vacancies are occupied by middle-aged leader types with their brand new laptops, cell phones, and latters ready for action that never comes. Barlow suspects that they are in the same boat as one of his friends, recently cut free as part of the recessionary downsizing.
Give me back my coffee shop

Next: Reverse number 20

In the market for a vacation in Vegas? Now it can be a great time. The Wall Street Journal recently reported that "Responding to a national economic downturn that has depressed gaming revenue and room rates … casino and hotel operators offer a buffet of spring time packages that are usually reserved for the hot, slow summer months." The room rates have fallen more than 20% of conventions don't stay as long as they used to be, the game revenue is down a bit, and it's easier to get into A-list clubs than it used to be.
More about Vegas Slowdown
Next: Trend Sign No. 21

Should the idea of ​​moving to a new city after upgrading, as the economy leads to a recession, scare you? If so, you may want to do what some whippersnappers do; Move in with Grandma and Grandpa to save money on rent. Many families make it work. Living with your grandparents can also bring benefits to the whole family, who can easily have someone help you around the house and be a point of contact in case of emergency.
More about Surprising Roomies
] More about AOL: Digging Out Debt

More About AOL:
How to Pay Down Debt

Sure, we all want to come get out of debt. But when you have made that decision and have unlocked a source of cash (big obstacles, to be sure), is it a question of what is the best way to pay it off? It depends on your goals.

Whether you're afraid of losing your home, retiring to retire, or wanting to get a big loan in the near future, WalletPop shares will have 6 common reasons why people will reduce their debt burden and best strategy for each.

Six smart ways to pay off debt




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"Stronger economic and financial relationships today have probably increased the risk of overseas gaming overshoot," Goldman economists led by Jan Hatzius wrote in a recent client note.

To address what a potential gaming law can look like, Goldman ran a handful of scenarios. The company looked at how previous worldwide growth cuts of 1, 2, 3 and 4 percentage points would manifest on the US front.

If a decline of 4 percentage points – that is, an absolute worst case scenario – the 2% US growth expected this year will shrink to zero, all of which will include a recession.

"This is quite high, although it is lower than it has been historically, both because the share of exports in US production has increased, and because the US economy's potential growth rate has fallen, making it easier to reach at least one technical recession below the standard if there is an arbitrary definition of recession as negative growth, says Hatzius.

Goldman also looked at what these downturn scenarios would mean in terms of backlash probabilities. Increase the odds to a great deal of 64%. There is hardly a situation that an American investor wants.

Finally, Goldman's findings suggest that the US is at greater risk of a recession being kicked up by a foreign slowdown than ever before. As such, if the specific developments outlined above occur in the United States, there may not be an unlikely breakdown of varieties to date.

For these reasons, it will be cautious for US focused investors to keep an eye on foreign events so that they do not harm the domestic economy.


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