The US auto industry has its own problems so I don’t think that’s a good yard stick. Caterpillar for instance just announced strong profits so not all companies or industries are doing poorly.
If a recession were to happen, I think one possibility is the selling of US treasuries by foreign governments. Foreign governments like China and Japan own so much treasuries, if they do decide to dump them (or buy less), it could trigger a jump in long term rates. And of course there’s the declining USD and if this trend resumes in 2006, Ben may have no choice but to raise short term rates. Then the whole yield curve could shift up, killing off business activities and cause a recession.
