Urgent: After falling 100%, Tera Luna rises 4400%.. but beware

 What will trigger the next US business recession?

The American economy has gone through four recessions in the last four decades. The broad decline between 1979 and 1982 was a major factor in all four. According to the Federal Reserve of the United States, the rate of inflation was too high, and hence the increase in interest rates led the economy to collapse. As a result, workers' wage demands were moderated, and companies' wage increases were restrained business recession.

Investing during a recession

• The previous three recessions were brought on by financial market turbulence. Following the savings and loan crisis of 1991-1992, the Internet bubble (also known as the dot-com or information technology boom) burst in 2000-2002, followed by the housing market crash in 2007, which triggered the global financial crisis the following year.

• Since early January 2019, inflation expectations have mainly remained anchored at 2% per year, and the Phillips curve, which depicts the link between unemployment and inflation, has remained exceptionally flat. Prices and wages were unaffected by increases in production and employment, or inefficiencies resulting from prospective or natural production patterns.

• Simultaneously, the spread between short- and long-term interest rates on safe assets, as represented by the yield curve, is exceptionally narrow, and short-term nominal interest rates are at an all-time low. An inverted yield curve is a significant indicator of a recession when short-term interest rates exceed long-term rates. Furthermore, following the recent stock market crash, forecasts based on John Campbell and Robert J. Shiller's (CAPE) cyclically adjusted price-earnings ratio put real long-term (inflation-adjusted) buying and selling returns at around 4% annually, which is still higher than the average for the past four decades.

• When considering whether or not to prepare for the next recession, investors should consider these underlying signs. The current macroeconomic side effects suggest that the next recession will not be caused by the Fed's abrupt shift from pro-growth to anti-inflationary policies. Given the fact that apparent inflationary pressures are unlikely to worsen in the second half of the decade, another factor is more likely to cause the next bout of deflation.

• The nature and specific shape of the next financial shock will, of course, be unpredictable. Expected shocks are safeguarded for investors, speculators, and financial institutions in general, but there will always be other unexpected shocks. The collapse of the global economy in 2008-2009, for example, was driven by a concentration on ownership of mortgage-backed securities rather than the bursting of the housing bubble in the mid-2000s.