Paul Fiorilla

Economic downturns in recent decades have generally started with a bang – bubbles bursting in the housing or technology markets or oil price shocks come to mind – but the next one is more likely to arrive as a whimper.

As the US economy approaches a decade without a recession – closing in on the longest such period post-World War II – guessing what will cause the next downturn and when it will commence has turned into a parlor game for business.

Analysts looking for an overheated sector that could bring the entire economy down are searching in vain. Problems that caused previous recessions seem relatively under control. For example, commercial mortgage lending has grown through the cycle, but leverage levels seem under control. Consumer debt is at an all-time high, but consumer debt-to-income ratios and household balance sheets are healthy. The stock market could be overpriced, and subject to a correction, but it's hard to predict a major bear market when corporate profits are at record levels. Oil price shocks have been a major factor in virtually every recession of the last half-century, and while oil prices have risen lately, but they remain nowhere near all-time highs while oil's impact on the economy is diminishing.