We are definitely overdue for a recession. I believe it will be a lot more mild than the last one, but it is about time.

We had 8 years of prosperity and growth (2010-2017). This is the longest bull market in history. That won’t last forever. Here are some trends that are leading to this recession.

The stock market is down almost 20% in the last 3 months. Consumer spending is the largest driver of US GDP, and stocks popped huge in the last year under expectations that tax reform would cause a surge in consumer spending. That did not happen, so stocks are coming back to earth.

Taxes are actually going up for close to 20% of Americans. I still fly with Captains who don’t realize they won’t be able to write off all of their crazy Texas property taxes thanks to the SALT deduction cap. Or their union expenses. Or their per diem differential. Or some fellow single FO’s (like me) who saw their marginal tax rate increase from 28% to 32%.

Meanwhile, while $1.5 trillion in revenue was cut due to tax reform, the US govt will spend more on discretionary spending than at any time in history, almost 30% more than it was spending from 2013-2016.

The Fed is not stupid. Inflation is coming. Low rates were needed to pull us out of the last recession, but all that free money needs to be reined in eventually. Higher rates means less money flowing through the economy.

Now half a million government employees are going without a paycheck during the government shutdown. The US government is our largest customer, and they’re not purchasing any airline tickets right now.

I could go on and on, but a recession is definitely overdue. Best advice is to live within your means and save to be prepared if the eventual recession has an impact on our industry.