Chief economist of Moody’s Analytics Mark Zandi says the $1.5 trillion of outstanding student loan debt has created a ‘crisis’ for young Americans. It’s part of the reason millennials are waiting longer to start families, buy houses, and launch businesses. It might also lead to the end of the US economy’s ‘virtuous’ cycle in 2020.

To solve the problem, he suggests shifting focus from providing student loans to increasing the supply of education options – including trade schools, online learning, and community colleges.

Chief economist of Moody’s Analytics Mark Zandi says America’s immigration policy under the Trump Administration conflicts with the country’s core interests.

He says what has historically made America’s economy “special” is that it attracts “the best and the brightest” from all over the world.

He also says baby boomers’ retirement will make welcoming immigrants a necessity in order to help keep programs like Social Security and Medicare funded.
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What Will Cause The Next Recession – Mark Zandi Says Corporate Debt…(read more)

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The next recession may be looming, and according to Mark Zandi, Chief Economist at Moody’s Analytics, corporate debt could be a major factor in triggering an economic downturn.

In recent years, corporations have taken on record levels of debt. This trend has been fueled by low interest rates, making it cheaper for companies to borrow money, and by the buoyant financial markets, which have encouraged businesses to take on more debt to fund expansion and investments.

However, this surge in corporate debt has raised concerns among economists and financial experts. Zandi warns that the high levels of debt could make businesses vulnerable to a downturn. If the economy slows down, companies may struggle to meet their debt obligations, which could lead to a wave of corporate defaults and bankruptcies.

Furthermore, the risk of a corporate debt crisis is heightened by the fact that much of this debt is held in the form of risky instruments such as leveraged loans and high-yield bonds. These types of debt have exploded in popularity in recent years, as investors seek higher returns in a low-interest rate environment. However, they also carry a higher risk of default, especially for companies with poor credit quality.

Zandi also points to the possibility of a “debt bubble” forming in the corporate sector. If interest rates were to rise quickly, companies could find themselves in a precarious position, as the cost of servicing their debt would soar, potentially leading to a wave of defaults and financial instability.

The potential consequences of a corporate debt crisis are significant. Not only could it lead to a wave of bankruptcies and layoffs, but it could also spill over into the broader economy, as businesses cut back on investments and spending, leading to a contraction in economic activity.

To mitigate the risks posed by corporate debt, Zandi recommends that businesses take steps to deleverage and strengthen their balance sheets. This could involve reducing debt levels, improving cash flow, and shoring up their financial position to weather potential economic headwinds.

Furthermore, policymakers and regulators need to be vigilant and monitor the corporate debt market closely, to ensure that excessive risk-taking does not pose a systemic threat to the financial system. They may need to consider implementing measures to reign in excessive corporate borrowing and reduce the likelihood of a debt crisis.

In conclusion, while the exact timing and causes of the next recession are uncertain, Mark Zandi’s warnings about the risks posed by corporate debt should not be taken lightly. It is essential for businesses, investors, and policymakers to be aware of the potential dangers and take proactive steps to reduce the vulnerability of the corporate sector to a debt crisis. By doing so, they can help safeguard the economy against the impact of a potential downturn.