Economic expansions never go on forever. As the United States’ long, slow recovery from the Great Recession stretches past the decade mark, regulators and economists are starting to get a little jumpy.
So where’s the bubble that will trigger the next downturn? Housing, like the last time? Corporations up to their gills in debt? Or something else economists haven’t even spotted yet?
Certain indicators already show softening, from capital expenditures to to manufacturing sentiment to residential construction. The question is whether that’s just a cooling off — or the beginning of a steeper slide.
A paper published this month by researchers at the International Monetary Fund found that forecasters typically have a hard time predicting serious downturns until they’re well underway. But it is possible to spot weaknesses that could snowball into crises if unforeseen events — from a trade war to a real war to a cybersecurity meltdown — knock the economy off its glide path.
On Wednesday, the Federal Reserve will release its first-ever report on the nation’s financial stability, which might begin to answer some of these questions. Here are three that Fed.