Could Spiking Income Inequality Cause the Next Recession? Holy Cross Economics Professor Explains

Theories are abounding when it comes to predicting the timing and possible triggers for a future recession, but according to Robert Baumann, professor of economics at Holy Cross, one thing's for sure — if we believe it, it will happen.

Baumann told Forbes in a recent interview that, "If enough people believe a recession is coming, then it will come. All it takes is for people to adjust spending in preparation for difficult times. This is [not] the only cause of a recession, but [a recession] can be willed into existence.”

One theory Baumann finds hard to prove is that rising wealth inequality could drive excessive borrowing, which in turn could lead to a recession.

"Looking back at the most recent recession it is hard to understand why so many found themselves with a risky loan," said Baumann. "One explanation is that lenders were incentivized to make larger loans and did not disclose the risk to the borrower."

You can read the full article at Forbes.com.