Many like Gundlach and Arnott expect expensive homes in high-tax areas like New York, New Jersey, Connecticut and northern and southern California to be devastated as a result of the elimination of state and local tax deductions, but he isn’t predicting a recession. Some observers like PGIM Fixed Income’s Collins think the U.S. economy has already returned to the New Normal.

But other nations like Ireland and Australia have gone 15 years or more without a recession, and their economies aren’t nearly as diversified as America’s. The good news is that the Federal Reserve has more ammunition to anesthetize the next recession than the rest of the world. The bad news is that the world economy is still globalized, and many problems are likely to come from beyond our borders where we have little control.           

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