The next recessionThe outlines of how the next U.S. recession might happen are becoming more clear. The last recession was very business-driven from the popping of the Internet bubble, but consumer spending stayed pretty high throughout, making it a relatively mild recession. I think the opposite may occur in the next one within a few years: global growth may keep business spending and growth up, but local consumers could scale back dramatically.
Why would consumer spending drop substantially? Because their adjustable mortgages are going to start kicking in, leading to higher monthly payments and less disposable income. The New York Times has a great article on the looming real estate bubble, with a neat national map of where the biggest threats are. Fortunately, Texas looks to be in pretty good shape, but the east and west coasts are set for a big hit. Unfortunately, a national recession will definitely impact Texas, even if our own real estate market is fine.