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It depends on so many factors. I know an engineer working tech in Phoenix who is being furloughed. His company isn't able to profitably import components from China, export finished products to China and have lost critical foreign engineering resources who didn't feel welcome in the US any more. That kind of thing isn't what caused the last recession.
Some key differences:
Demand
China and India (45% of the global population) were still going strong then through the last recession and companies were still able to post good P/Ls. This time emerging markets probably won't be able to pick up for slacking demand in established markets.
Retail is hurting everywhere. It remains to be seen if those jobs are being replaced by warehousing/logistics from online shopping
Demographics -
The peak of the baby boom generation is retiring- that means many pension funds will be selling assets to pay out pensions to this group. This can, in theory lead to a negative feedback loop if asset prices decrease.
Immigration is under pressure. This has been a key component in economic growth
People are having fewer children on average or forgoing having children. That is important in terms of lifestyle choices such as needing/wanting a big house in the suburbs
I have always felt that recessions are something created by all the greedy investors and profiteers out there who pump up prices and then sell and wait until the prices fall again so they can buy cheap and repeat the cycle.
This is just a way for the rich to get richer and the poor to get poorer. Have you noticed that after the last "great Recession" the wealth gap grew exponentially?
I would say that Las Vegas, Phoenix, Detroit and Denver will be hardest hit when the next recession comes.
Las Vegas is still very leisure and tourism based and usually vacations are the first things to wait when a general population has less money to spend. Alot of the economic growth in Las Vegas has been in construction also lately for mega-projects and those usually dry up during a recession.
Phoenix in general won't have the job loss percentage of other places during many other places, during a recession. But numerically it will.
Arizona residents and in particular Phoenix though carry alot of debt. Many of the people who move there extend themselves way beyond what they can afford.
Here is an interesting report with charts on state debt, Arizona residents in general are very debt-laden considering overall it's a relatively low-income state
Detroit will largely be hard-hit when car sales decline. There is so much auto debt out there and so people have bought luxurious cars on debt in the last several years and will delay new purchases.
Denver has a stable economy overall but there are alot of very cyclical industries in the area also that would be hard-hit in a recession. But the issue is the very, very high median home prices that many people have paid there in the last several years.
Denver metro also has a very leveraged population. A majority of the households have huge mortgages, lots of people in their 20s and 30s moving to the area with families which are pricey. With the young adults flocking the area it also means large amounts of university debt. I wouldn't be surprised if an usually high amount of auto debt with the cars people drive there and many people there tend to be naturally big spenders.
This is a fairly interesting article on the massive amount of debt per-capita that Colorado residents have.
You were obviously a child in the last recession. The Bay Area weathered the last housing crash really well. Upscale markets are always the last to decline in price and the first to bounce back. Bay Area is a tech-capital centric economy. So investor confidence has to tank in tech like the dot.com bust, for the bay to hurt.
Boston, NYC, Seattle, San Francisco, and maybe a handful of other elite markets will weather the crash fine. I'd be more worried about places without a substantial economy - think Vegas or Florida markets.
That last recession just about ruined my life. It certainly took everything away that I had made up to that point including a house. Things are starting to look good again but that is what happened last time too. Then all of the sudden everything fell apart. I sure don't wish that on anybody. But it is a possibility.
That last recession just about ruined my life. It certainly took everything away that I had made up to that point including a house. Things are starting to look good again but that is what happened last time too. Then all of the sudden everything fell apart. I sure don't wish that on anybody. But it is a possibility.
Not only is it a possibility - it is a given. We ARE going to have another recession some day. It's the nature of the market. But you know what - it will pass too, just like the last one. Don't overextend yourself. You will probably be fine. And then it will happen again and you will probably be fine again. In between you will probably be more than fine.
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Next Recession could reshape the world
