The Next Recession

John Mauldin considers what might cause the next recession in America. He talks about energy prices, housing markets, and the impending handover of the US Federal Reserve to Alan Greenspan's successor (as yet unannounced).

Mauldin's commentary quotes the Center for Economic and Policy Research, describing the tradeoff between maintaining low inflation and keeping the economy afloat:

...The immediate path forward looks very shaky as the economy is ever more dependent on the housing boom and debt. If wage growth does not begin to pick up, it will be difficult for this cycle to continue much further. However, if wage growth does pick up, then inflation will accelerate, pushing up interest rates, which will burst the housing bubble.

Mauldin's focus is on the US, but his analysis certainly has implications for Canada, and for Canadian real estate markets.