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The administration may breach the debt ceiling in September, leading to economic turmoil that top economists say would be “more catastrophic” than the collapse of Lehman Brothers in 2008. toward a no-deal Brexit, which even his own administration acknowledges would have “immediate and significant spillover effects” to our economy. Treasury yield curve — a barometer for market confidence — normally slopes upwards because investors demand higher yields for bonds with longer maturities.
Trump’s trade war with China threatens American manufacturing and has already hurt American companies that investors think of as “industry bellwethers,” while feeding an all-time economic slowdown in China that could have dramatic ripple effects on the American economy. The financial markets agree that there is a serious risk of downturn in the near future. But this March, it inverted for the first time since 2007, signaling that investors are so worried that things are going to get worse that they’d rather lock in lower rates for the future today than risk long-term rates going even lower.
The Federal Reserve just reported that the manufacturing sector had a second straight quarter of decline, falling below Wall Street’s expectations.
And for the first time ever, the average hourly wage for manufacturing workers has dropped below the national average.
I’ve warned regulators about my concerns — which experts share — but their tepid response shows they haven’t learned the lessons of the last crisis.
Despite Trump’s promises of a manufacturing “renaissance,” the country is now in a manufacturing recession.
Whether it’s this year or next year, the odds of another economic downturn are high — and growing.
Congress and regulators should act immediately to tamp down these threats before it’s too late.
Those trends — shady subprime lending, rising household debt, a mortgage market where lenders didn’t bear the risk of their loans — set the stage for the 2008 crisis.
But the people with the power to stop the crisis didn’t listen — not enough of them anyway.