Sen. Elizabeth Warren said Monday that “warning lights are flashing” for a serious economic downturn and urged Congress and federal regulators to quickly take steps to minimize the impact on working American families of a potential recession.
Warren, a 2020 White House hopeful who as a Harvard University law professor was among the earliest to raise warnings before the 2008 financial crisis, said in an essay that she is seeing similarly dire signals that should give U.S. lawmakers pause at a moment when unemployment hovers near 50-year lows and the stock market is roaring.
There’s the looming deadline for Congress to raise the U.S. debt ceiling or trigger a government shutdown that would hack an estimated $6.5 billion from the economy for each week it festers.
The U.S. Treasury yield curve — a barometer for market confidence – in March inverted for the first time since 2007, suggesting that investors are worried that things are going to get worse, so they’d rather lock in lower interest rates for the future rather than risk long-term rates going even lower. The curve has inverted before every recession in the past half century — with only one false signal.
And a survey of nearly 300 business economists, three-quarters said they expect a recession by the end of 2021 — with more than half predicting it’ll come by the end of 2020, according to a National Association of Business Economics poll conducted earlier this year.
“Warning lights are flashing,” Warren writes. “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.”
The dire message by Warren contrasts with President Donald Trump, who regularly celebrates robust monthly job reports and new heights for the stock market. Last week, the Dow Jones Industrial Average passed 27,000, marking a new all-time high.
On the campaign trail, Warren — who is among the top Democratic contenders in early state and national polls — has been critical of Trump’s handling of the economy. She argues that it has been good for C-suite executives and shareholders but is leaving regular working people behind.