As you probably know, the U.S. stock market has been in the red zone over the last few weeks. International experts assume that this downtrend is likely to continue in the first quarter of 2019. The key reason is the fact that really huge volumes of risky assets are under the risk of forced sales, Market leader reports, with reference to Forbes.
At the same time, some experts - lets call them optimists - assume that somewhere in mid-2019 the American economy may set a new record related to the duration of growth. The current record was set more than 17 years ago, in 2001. Back then, the positive economic performance started amid the disintegration of the socialist system in Europe and finished amid the burst of the so-called dotcom bubble. On top of that, they say the American GDP is likely to continue its growth over the next 1-2 years.
They experts draw our attention to the progress in adopting new technologies influencing consumption (social media, online trade, renewable energy, IT) and are fixing the positive experience in managing the GDP growth with the help of interest rate hikes and cuts as well as monetary stimuli. For now, the United States and some other countries like the EU, the UK, Japan, and China have already implemented monetary easing as well as long-term and mid-term financing for banks. All of that resulted in pumping those economies with trillions of dollars in credit funds backed by nothing. With that being said, the regulators' activities literally allowed banks and governments to get funds almost for free. In their turn, those funds were pumped into international stock markets and used to boost the market cap. As a result, the bullish cycle was extended, thus backing the development of technology, employment, standards of life, especially in the USA.
According to moderate pessimists, 2019 is probably going to be the last one in the bullish cycle. Analysts assume that the more the Fed and Trump's administration extend the period of relatively high artificial GDP growth (up to 3% a year), the deeper and longer the following economic recession is likely to be, especially for emerging economies.
Economists Predict Crisis
Many popular economists, including widely known expert Nouriel Roubini, and experienced asset managers have named the reasons for the new financial crisis they expect to come in the near future. The list includes the following factors:
- tax stimuli supporting the American GDP growth (will expire in 2020)
- trade wars
- protectionism
- asset sellout
- overpriced American stocks
- bad debts
However, they say that the key risk factor is that inflation growth may force the Fed to raise the key interest rate
