Democratic presidential hopeful Elizabeth Warren highlighted burgeoning debt levels and recent declines in manufacturing as factors making the U.S. economy vulnerable to a downturn, previewing a line of attack Donald Trump's opponents will use to pierce the aura of a record-long expansion and half-century low in unemployment.
In a blog post Monday titled "The Coming Economic Crash — And How to Stop It," the Massachusetts senator said she sees "serious warning signs" similar to the run-up to the 2008 financial crisis. In addition to the economic weaknesses, Warren cited the inverted Treasury-yield curve and a poll of analysts as backing the idea that a recession is likely on the way.
Warren flagged as dangerous increases in household debt from student loans, credit cards and auto loans, along with rises in riskier corporate debt. While the figures she cites generally hold up, sometimes extra context is omitted: For example, while she says the level of credit-card debt is rising and recently matched its 2008 peak, on a per-household basis it's actually still below the peak.
The senator also highlighted last week's data from the Federal Reserve showing manufacturing has contracted in the U.S. for the past two quarters, "despite Trump's promises of a manufacturing 'renaissance." Whether that foretells a downturn remains a question: Factory output weakened in both 2015 and 2016 and the economy avoided recession.
Even so, Warren's essay details a potential plan of attack that she and other Democratic candidates can use to try to persuade voters that the foundations of what looks like a healthy economy may actually be shaky. Next week's debate will offer the candidates another opportunity to detail these views in the early days of the 2020 campaign.