The Federal Reserve's interest rates have been steadily rising, which means the nearly decade long period of having a 0.25% Fed Funds rate will finally catch up with us. There's no telling when the recession will take place, but I'm going to predict that it will happen while Trump is still president (and I'm assuming that he will win again and serve a second term).
Historically, the longer the period that we've had artificially low interest rates, the more severe the resulting recession has been. Throughout the roaring twenties, we had very low interest rates which resulted in the Great Depression. We also had low interest rates throughout the 2000s which resulted in the "Great Recession" of 2008. The recession doesn't happen until after the interest rates are raised, so the current upcoming recession did not have a chance to commence since the Federal Reserve practiced extreme artificial measures from 2008 until earlier this year.
This time, the interest rates have been lower for a longer period of time than ever. The outcome will be catastrophic.
Certainly, if the recession does indeed take place while Trump is president, the blame will be placed on Trump's deregulatory practices. The narrative will be pushed that the deregulation caused more freedom and when people are free they don't know what to do, causing a severe recession as a result of lack of governmental oversight.
The Austrian solution to the recession will be to allow the market to correct itself. In other words, from the government's standpoint, do nothing. The Keynesian solution will be to lower the interest rates again and pump as much money into the economy as possible via government spending.
Being the pessimist I am, I think that whoever is in charge at the time of the recession, be it Trump or someone else, will respond in the Keynesian fashion, temporarily boosting the economy but, in the long-run, sending us off into another recession later down the road. It will only be when government resources are exhausted will any real economic growth happen.
