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Next U.S. Recession May Not Be a Biggie But Could Be a Long One

  • Absence of economic imbalances argues for a milder downturn
  • Limited Fed firepower suggests contraction may be protracted
A U.S. flag hangs outside the facade of the New York Stock Exchange.

A U.S. flag hangs outside the facade of the New York Stock Exchange.

Photographer: Daniel Acker/Bloomberg
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If the U.S. enters a recession this year, it may end up a lot like a boring conversation at a cocktail party: painfully long and shallow.

The world’s largest economy has a host of strengths, from well-capitalized banks to financially-stable households, which should help limit the depth of a downturn should one happen. Yet with interest rates barely above zero, Federal Reserve Chair Janet Yellen and her colleagues are short of measures to lift the economy quickly out of a rut, economists say.