Rate of change in delinquencies is at the same level as early 2006. It should cross 0 this year. In 2006 PE ratio was much less and the SPY was on a tear (+15%) so it’s only similar in that the underlying debt market is beginning to show stress . Also the Fed was much more aggressive then, raising rates to 5% by August. This year Fed is due to raise rates to 1.5%.
Why 11 years to recession this time? Inflation was very low for a long time (2009-2011,2013-2016) leading to a drawn out recovery. So perhaps it will take longer for recessions to take place than in the past.
Reasons for recession 2019:
- Unemployment claims still falling so no sign of recession next year (2018)
- Car sales will cross to -ve growth this year and its usually 2 years to recession after doing so
- All loans delinquencies will cross to +ve Yr/Yr which is again a 2y clock (see above)
Side note: Millenials have no money. Also worker starting salaries are higher than those from university.
Also too high expectations right now…
Also from pragcap-
It gets worse though. You have to keep in mind that most financial advisers are charging about 0.9% these days for what is basically high fee asset management using underlying mutual funds or index funds with an occasional dollop of financial planning. So, on top of the 0.66% in fund costs many investors are incurring another 0.9% in advisory fees. Granted, this probably pays off for many investors who actually need the coaching and structure implemented by a good advisor, but 1.56% of your assets per year is an egregiously high cost for what is essentially the equivalent of having a personal trainer for your portfolio.
Credit Flow Investor 