Next Recession Will Be in 2026

An 18-year cycle of real estate and land values has been the cause of every major recession, and without a radical shift in taxation structures, the U.S. economy will be in for another shock around 2026. had the opportunity earlier this month to speak with Fred Foldvary, professor of economics at San Jose State University and board member of the Robert Schalkenbach Foundation. Foldvary predicted the last recession in his 2007 book ‘The Depression of 2008’, and said real estate bubbles in general can be predicted using an 18-year cycle model developed by early-20th-century economist Homer Hoyt.

“[Hoyt found that] in Chicago there was an 18-year real estate cycle with very astonishing regularity, and that also coincided with the general business cycle of the United States,” he said.

Foldvary used the same methodology as Hoyt, swapping in the most up-to-date numbers from today’s real estate sector.

“I brought it up to date with current data on both construction and land data… The data is out there for the last 50 years,” Foldvary said.

A combination of low interest rates and high land values was the key warning signal for recession, Foldvary said, a kind of hybrid between the Austrian and Georgist schools of economic thought.

“The major recessions have all been closely related to the real estate cycle,” he said. “In each case the real estate prices and construction peaked shortly before becoming a recession.”

Without any unprecedented changes in government policy, there was no immediate risk of another recession for the next decade, Foldvary said. But the other side of the coin is that, without new ways of thinking about land values and controlling speculation, the U.S. economy should be prepared for another recession in around 2026.

“The federal debt will be that much higher, and if the government is all tapped out and it can’t borrow any more money in the next financial crisis, it could be even worse than 2008,” he said. “The economy has the same structure as it’s had for the last 200 years. The basic problem is massive subsidies to real estate – both fiscal subsidies and monetary subsidies.”

Even newer financial regulations like Dodd-Frank would be ineffective, because they failed to address the core reason for the business cycle, Foldvary said.

“They don’t touch the fact that land values absorb the benefits of progress, and then speculation carries them to a height that makes real estate unaffordable, and then you have the collapse.”

The potential for a system of land value taxation to break this 18-year cycle is enormous. Taxing land and natural resources instead of incomes and investment would act to discourage real estate speculation, keep the market accessible for wage-earners, and stimulate the construction of centrally-located real estate that promised the best value for the public and the greatest amount of space in which to work and live.

There will come a time in the next ten years when we will begin to see the signs of another impending recession in the U.S., one with the potential to be the worst this country has ever seen. Knowing the precipitating factors of a future crisis, and as the economy experiences slow growth, now is the critical time for land value taxation to be seriously considered.


Fred Foldvary is on the board of the Robert Schalkenbach Foundation (RSF), a non-profit organization established in 1925 to spread the ideas of the social and economic philosopher Henry George (1839-1897). Foldvary received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University. He has taught economics at the Latvian University of Agriculture, Virginia Tech, John F. Kennedy University, California State University East Bay, the University of California at Berkeley Extension, Santa Clara University, and currently teaches at San Jose State University. Foldvary is the author of The Soul of Liberty, Public Goods and Private Communities, and Dictionary of Free Market Economics. He edited and contributed to Beyond Neoclassical Economics and  The Half-Life of Policy Rationales. Foldvary’s areas of research include public finance, governance, ethical philosophy, and land economics.



2 thoughts on “Next Recession Will Be in 2026

  1. I have been involved with fellow Georgists for some time, yet I have not yet found an good explanation of why the cycle of slump/boom has a regular frequency of about 18 years. We know what causes these oscillations, but what is the (theoretical) mechanism for this time period? (and why is the frequency so steady?)

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