Could This Turn Into a Financial Crisis? Here’s What 3 Economists Are Monitoring.


Could This Turn Into a Financial Crisis? Here’s What 3 Economists Are Monitoring

By Steven Orlowski, CFP, CNPR

A string of economic headwinds—stubborn inflation, geopolitical tensions, rising debt levels, and growing cracks in the banking system—has economists on edge. While a full-blown financial crisis isn’t a foregone conclusion, experts are increasingly focused on specific indicators that could signal deeper trouble ahead.

To better understand what’s at stake, we asked three respected economists what they’re watching most closely—and why.

1. Dr. Lisa Tran, Senior Fellow, Brookings Institution

Watchpoint: The Commercial Real Estate Market

“The commercial real estate (CRE) sector, particularly office buildings, is under severe stress,” says Dr. Tran. “Remote work trends and rising interest rates have decimated demand and sent property values tumbling.” Many commercial properties are financed through variable-rate loans, and as those reset, borrowers face ballooning payments they can’t afford.

Tran warns that regional banks—many of which are heavily exposed to CRE—are especially vulnerable. “If defaults accelerate, banks could see significant losses, and credit tightening would ripple through the broader economy,” she adds. “This is how contagion starts.”

2. Professor Andrew Malik, Chair of Economics, Stanford University

Watchpoint: Consumer Debt and Delinquencies

“The U.S. consumer has been incredibly resilient, but that’s largely due to pandemic-era savings and stimulus,” says Malik. “Now, those reserves are drying up, and we're seeing a sharp rise in credit card and auto loan delinquencies.”

According to the latest data from the Federal Reserve, credit card balances have reached record highs, and delinquency rates are climbing across nearly all income brackets. “If job growth slows even modestly,” Malik says, “we could see a wave of defaults that undercuts consumer spending—the backbone of the U.S. economy.”

3. Dr. Helena Kovács, Chief Economist, Eurasia Global Analytics

Watchpoint: Sovereign Debt in Emerging Markets

While domestic concerns often dominate headlines, Dr. Kovács warns that emerging-market debt could be the spark that lights the fuse. “Many countries borrowed heavily during the pandemic and are now struggling with a toxic combination of dollar-denominated debt, higher global interest rates, and weaker currencies.”

Countries like Argentina, Egypt, and Pakistan are already in crisis talks with the IMF. “If a major emerging market defaults,” Kovács explains, “the contagion could spread quickly through global bond markets and expose overleveraged hedge funds and institutions.”

Is a Crisis Inevitable?

While none of the economists believe a 2008-style collapse is imminent, they all agree that vulnerabilities are rising. The next few quarters will be critical in determining whether these stress points can be managed—or whether they morph into a broader financial crisis.

“We’re not there yet,” says Dr. Tran, “but the risk is no longer hypothetical. It’s very real.”

Key Takeaways:

  • Commercial Real Estate: Regional banks could face mounting losses as office properties default.

  • Consumer Debt: Rising delinquencies may signal the end of pandemic-fueled spending resilience.

  • Emerging Markets: Sovereign defaults could trigger broader market panic if left unchecked.

As the global economy navigates uncertain waters, policymakers and investors would do well to keep an eye on these three critical indicators.

Comments

Post a Comment

Popular posts from this blog

3 Big Energy Stocks Offering Strong Dividends Amid Volatility

Image
3 Big Energy Stocks Offering Strong Dividends Amid Volatility By Steven Orlowski, CFP, CNPR In a market marked by persistent uncertainty, rising interest rates, and geopolitical tensions, income investors are seeking stability and yield in all the right places. One sector continues to stand out: energy. While oil and gas prices remain volatile, the long-term demand outlook and disciplined capital strategies have turned several major energy companies into dividend powerhouses. Here are three energy giants offering robust dividend yields and resilient fundamentals, making them attractive options for investors seeking income and relative stability in turbulent times. 1. ExxonMobil (NYSE: XOM) Dividend Yield: ~3.4% Market Cap: $470+ billion ExxonMobil is one of the largest integrated oil and gas companies in the world. Its scale, upstream and downstream operations, and global reach offer a level of diversification that helps buffer against short-term price swings. In recent year...
Read more

Stocks making the biggest moves midday: Eli Lilly, Alphabet, Hertz, UnitedHealth and more

Image
  Stocks Making the Biggest Moves Midday: Eli Lilly, Alphabet, Hertz, UnitedHealth, and More ​ As of midday on Thursday, April 17, 2025, U.S. stock markets exhibited mixed performance, with significant movements in several key stocks. The Dow Jones Industrial Average dropped nearly 400 points, primarily due to a sharp decline in UnitedHealth Group shares. Conversely, the S&P 500 and Nasdaq Composite showed modest gains. ​ Eli Lilly (LLY) – Soaring on Weight-Loss Pill Success Eli Lilly's stock surged by up to 17% following the announcement of successful phase-three trial results for its new weight-loss pill, orforglipron. This once-daily oral medication demonstrated effectiveness comparable to injectable alternatives like Novo Nordisk's Ozempic, leading to an average weight loss of 16 pounds (about 8% of body weight) and a reduction in A1C levels by 1.3% to 1.6%. The promising results have investors optimistic about the drug's potential market impact. ​ United...
Read more

Stock Spotlight – Stock of the Week: UnitedHealth: Where Does the Company Stand After the Storm?

Image
  Stock Spotlight – Stock of the Week: UnitedHealth: Where Does the Company Stand After the Storm? UnitedHealth Group (NYSE: UNH), a cornerstone of the American healthcare industry, has weathered its share of challenges over the past year. From regulatory pressures and increased utilization costs to a rapidly evolving competitive landscape, investors have had plenty to digest. But as the dust settles, one question remains: Where does UnitedHealth stand now—and is it still a buy? A Quick Look Back: Navigating Headwinds 2024 was a turbulent year for UnitedHealth. The company faced mounting pressure from multiple fronts: Rising medical costs , particularly in its Medicare Advantage segment, dented margins. Regulatory scrutiny intensified, especially around pharmacy benefit management (PBM) practices and alleged anti-competitive behavior. The change in utilization patterns , with more seniors returning to in-person care post-pandemic, increased short-term claims expenses. ...
Read more