So if the next recession does arrive in 2020 or 2021, how will it play out? The biggest fear of most professional investors is that the companies whose executives were the most overextended with leverage run into debt service problems. Even if the covenants favor them at the expense of bondholders, their stock prices collapse and they get acquired by financially competitors. Those competitors promptly fire thousands of workers to make the acquistions accretive to earnings.
Just look at Disney’s acquisition of Fox’s movie and TV studios, which closed last week. The ink was barely dry when pink slips started going out to top Fox execs. The number of layoffs is expected to go into the thousands as Disney seeks to save $2 billion in annual expenses to justify its $71 billion price tag.
It's also worth noting that Fox was a very successful, profitable company. Less viable businesses are likely to experience more severe cost reduction plans.
How fast or slowly this scenario unfolds could determine when the next recession arrives.