Voluntary recession

The U.S. and the world, continues its course to a beautiful trade rebalancing, but consumers are corporations, at least in the U.S. don’t see a rosy path towards that rebalancing. In fact, more a more, the concept of a “voluntary recession” is gaining momentum. In the chart below, you can see a calendarized scenario from liberation day to recession during the summer. The concept of voluntary, is due to the fact that the U.S. is the one pushing for that scenario to unfold. But the reality is more nuanced: the U.S. is forced to do this to avoid fiscal implosion. The current model of minimum manufacturing, pure consumption, high debt levels and high deficits, is weakening the economy, and surely leads, in the not so distant future, to the collapse of the U.S. empire. The problem is, in order to not lose the privileged position of being the leader, the U.S. needs to go through a short term pain. But we don’t know how short it will be, nor how painful. We’re hoping for a shallow recession because on the other end of the rebalancing, China is also going trough a weakening period. Thai is a generational change that will be studied in the future.

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