NewsCovering Colorado


Red flags for U.S. economy could lead to downturn

Posted at 9:35 PM, Feb 19, 2019
and last updated 2019-02-20 00:24:37-05

COLORADO SPRINGS – The latest numbers show a robust U.S. economy.

Over 300,000 new jobs were created in January. Unemployment is just four percent nationwide, more jobs are being posted, and earnings are up slightly for U.S. workers.

However, there are also warning signs of a possible downturn. These red flags are tied to trends both in the U.S. and economic conditions beyond the country’s borders.

“What is coming in all likelihood within the next year or so?”

It’s something Tatiana Bailey, director of the UCCS Economic Forum, is continuing to track: what direction will the U.S. economy go?

Bailey said, “It’s not likely to be any type of downturn like what we saw in 2007.”

Even so, she said it’s still important to keep an eye on some key indicators.

“Credit card loans…auto loans and the delinquency rates for these types of loans, home equity loans and so forth, do tend to go up a bit just before a downturn.”

According to Business Insider a federal report recently published showed that a record number of Americans were three months or more late on making car payments. When it comes to household debt, a report by the Federal Reserve Bank of New York shows it rose by $32 billion to $13.5 trillion at the end of 2018.

“Prior to the Great Recession one of the things that exacerbated it is the fact that our savings rate was so low.”

Other indicators are a decline in manufacturing production and a significant drop in retail sales.

Bailey said current consumers are not “as confident for the bigger ticket items first.”

While these factors combined could lead to a recession, Bailey believes it will be a much softer landing than the one in 2007. But as always, prepare for the worst.

“Always look at your finances. Always make sure that you’re not going…beyond your means.”

Bailey also said March will be pretty pivotal as the U.S. is supposed to bump up tariffs with the Chinese to a rate of 25%. If both countries don’t come to an agreement by then, that will be another hit to manufacturing and the U.S. economy as a whole.