Despite the recent consumer confidence report that says that consumer confidence is at its highest level in the last decade, and despite the stock market indices reaching record levels on an almost daily basis, it appears that many may have forgotten Federal Reserve Board Chairman Alan Greenspan’s words in a speech on Dec. 5, 1996, when he stated “Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets, but how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?”
History has taught us that certain economic indicators can foretell an upcoming financial downturn even during new stock market highs almost every day. It has been well publicized that a number of significant retailers have sought Bankruptcy Court protection, and, in so doing, have closed numerous or all of their locations. Others have closed all stores without any bankruptcy proceeding. Based on more than 50 years of experience in handling bankruptcy law cases, and studying prior economic downturns, despite the exuberance displayed by the stock market, this author concludes that there are many signals that are prevalent which foretell another significant economic downturn.
