Recession likely? VA finance chief says ‘We just need to be prepared’

Recession likely? VA finance chief says ‘We just need to be prepared’
Virginia Secretary of Finance Aubrey Layne speaks to reporters following an event to announce proposed school funding increases, including an additional 2 percent raise for teachers. (Ned Oliver/Virginia Mercury - Dec. 11, 2018)

Virginia’s top financial officer is sounding the alarm about an imminent recession — a situation he says the state has been monitoring.

The least we should expect is a significant slowing of growth, said Aubrey Layne, Virginia’s secretary of finance, but a recession in the next 12 to 18 months is “more likely than not.”

“I see those signs coming,” Layne said, citing recent volatility in the stock market. “We saw stock and bond markets react significantly this week.”

The Dow plunged more than 800 points for the first time in over a decade Wednesday, while the bond market followed a pattern that typically forecasts a recession. Layne in part blamed a U.S.-China trade war instigated by the White House, which he said has helped steer markets in the wrong direction.

“The uncertainty is really created by policy in the United States,” said Robert McNab, an economics professor at Old Dominion University. “We don’t have a firm grasp on trade policy. One thing markets and businesses hate is uncertainty.”

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