I don’t see it that way. This is actually the 2nd recession that is a direct result of the effects of a rising population density and/or attempting to engage in free trade with nations much more densely populated than ourselves.
The first occurred in ‘91-’92. At that time, the downsizing of companies in response to foreign competition was fierce. Every day, more companies announced tens of thousands of job reductions. It was pretty tough to avoid a recession in that environment.
That recession was ended by a confluence of three factors: (1) A wave of optimism that accompanied the election of Bill Clinton, who vowed to turn the economy around, (2) a high-tech explosion that introduced cell phones and the internet to the American economy in a big way, and (3) lower interest rates, although this last factor was dwarfed by the first two.
The brief recession in 2001 was due to the bursting of the “dot-com” bubble and collapse of the NASDAQ stock market, followed by the effects of 9/11.
But the recession we now find ourselves in is the 2nd caused by the effects of population density which, over the years since the ‘91-’92 recession, have continued to grow. But, during the period following the 2001 recession, these effects were masked by three things: (1) unprecedented deficit spending by the government, (2) money fleeing the stock market and seeking shelter in real estate, driving the housing boom and, once again, (3) unprecedented cuts in the Fed’s interest rates, also helping to fuel the housing boom.
But the housing boom couldn’t be sustained once the flight of money from the stock market subsided. Lending standards were reduced in a vain attempt to keep it going, selling homes to people who couldn’t afford them because their wages hadn’t kept pace with inflation. Now the debt binge is over. Our foreign benefactors aren’t happy about losing their money and are demanding safer investments. So the easy money that kept us going the last few years has dried up. And, by this time, all those “high tech” jobs created during the ’90s, which at that time were ballyhooed as our economic salvation, had long since been exported, just like all of our other manufacturing jobs. Now we’re left to face reality – an economy with a manufacturing sector, one of the key pillars of any economy, that has been almost completely gutted. Even jobs in the services sector, another one-time supposed savior, have been fleeing the country.
How will we pull ourselves out of this recession? Well, although it was our debt binge that papered over our economic problems for the last few years, the government believes we need to make it easier for Americans to keep borrowing and spending. They are printing money to lavish on the banks to artificially shore up their reserves. They want Fannie Mae and Freddie Mac to be able to make bigger loans. All of this will ultimately make these entities more insolvent. It will probably work for a while and this recession will end, but our problems will continue to grow.
This isn’t just the normal business cycle at work. The government is running out of rugs under which to sweep our problems. Until they come up with some way to restore balance to our trade picture (and tariffs are the only way), the underlying problem will continue to grow, regardless of what else they do. Count on it.