Democratic presidential contender Sen. Elizabeth Warren issued a stern warning on Monday that the next financial crisis is on its way, and it could be “by the end of 2021 -maybe even by the end of 2020.”
“Warning lights are flashing. Whether it’s this year or next year, the odds of another economic downturn are high — and growing,” Warren wrote in a post on the blogging platform Medium.
The warning lights are flashing. Whether it’s this year or next year, the odds of another economic downturn are high. This time, though, we can head it off. Congress and regulators should act immediately.
— Elizabeth Warren (@ewarren) July 22, 2019
Warren also noted weakness in the manufacturing sector, putting the blame for its recent slowdown on President Donald Trump, who has tangled with China over trade. Despite Trump’s pledge to bring back manufacturing jobs, the sector is now in recession, she wrote, and wages for the industry lag the national average.
“The country’s economic foundation is fragile. A single shock could bring it all down. And the Trump Administration’s reckless behavior is increasing the odds of just such a shock,” Warren wrote.
Warren said that increasing household and corporate debt has left the economy on precarious footing. Citing a top economist, she wrote that a failure to raise the debt ceiling in September could be “more catastrophic” than the 2008 collapse of Lehman Brothers.
The dire message by Warren contrasts with President Donald Trump, who regularly celebrates robust monthly job reports and new heights for the stock market. Last week, the Dow Jones Industrial Average passed 27,000, marking a new all-time high.
Out on the campaign trail, Warren — who is among the top Democratic contenders in early state and national polls — has been critical of Trump’s handling of the economy. She argues that it has been good for C-suite executives and shareholders but is leaving regular working people behind.
Federal Reserve Chairman Jerome Powell highlighted weakening U.S. economic indicators to lawmakers this month during an appearance before the House Financial Services Committee, increasing the odds of an interest rate cut. A rate reduction would boost markets that have suffered under Trump’s so-called trade wars with countries like China.