USD: Next US recession long overdue – Rabobank

By FXStreet FXStreet (Delhi) – Philip Marey, Senior US Strategist at Rabobank, notes that the US economy came out of the Great Recession in June 2009 and has seen an expansion that has lasted for 75 months (as of 2015Q3) and with the average post WWII expansion lasting 58.4 months it could be argued that the next recession is long overdue.

Key Quotes

“The large and domestically-oriented US economy should be strong enough to deal with external demand shocks, such as the slowdown in the Chinese and other emerging economies. Meanwhile, oil shocks may have a smaller impact now that the domestic shale oil industry has made the US less dependent on oil imports. In contrast, domestic shocks may pose a serious threat to the current expansion.”

“First, fiscal policy remains characterized by threats of government shutdowns and defaults. While government shutdowns tend to be a modest drag on GDP growth, a stalemate on the debt ceiling might lead to a default that could spark a US sovereign debt crisis. Meanwhile, the November 2016 elections could lead to Republican control of both the White House and the Congress. If this would lead to aggressive cuts in government spending, the multiplier effects could derail the …read more

Source:: FX Street