I recently heard on a Planet Money podcast episode, during a discussion of possible impending recessions, that the bull run could last indefinitely unless something stops it.
This was a curious thing to hear, because a lot of the phraseology around markets implies they are cyclical. But I think they're right. This is an issue of risk, but when something unexpected happens, it's always a specific thing.
It's a very strange statement, to say, something strange and unanticipated will happen, generally 6-12 years since the last time, and it's very bad but in the meantime people will be very optimistic about the future. This presents a very confused vision of the world. Perhaps a better lens would be: it has been long enough since the last recession that we may have gotten lazy. We are making some mistake. And the world is not nearly kind enough to correct all of our mistakes quickly.
At some point our mistake will be too much to fix, and we might try, but it won't work.
This is the actual shape of recessions, I think. There is a lot of optimism about how much bailouts help. Perhaps that's partially warranted. I suspect the bailouts are a major cause of the carelessness that causes the next recession. I wonder how many rash politicians curse themselves every time, how many look back on their life with dread for causing more problems than they solved.
The real question is, what problem is the one that will cause the next big problem, the next problem so large it cannot be fixed. I think a debt-fueled higher education crisis leading into a preference cascade might be the most salient risk. The modern justification for college sounds like a Ponzi scheme – if it has N% return, it must be worth doing. No attempt at an instrumental justification, rarely much more specificity than 'college' or maybe 'STEM' in the recommendations (which is a great situation for low-cost providers to flood the market with lemons). For my own field (computer science, to whatever extent practitioners engage in 'science'), it would be farcical to claim the degree prepares people meaningfully. It's not even clear it attempts to.
America seems to have a few more decades before sovereign debt destroys it. This will be, of course, a geopolitical catastrophe of the highest order, from which it is possible the world will never recover, so ya know, I hope every dollar spent is enjoyed in the meantime – China's pan-national dystopia will gladly make similar sounding social programs, don't worry.
It's also possible an economic downturn will be triggered by an unforeseen military conflict, or maybe some of those socialists will get actual power. Who knows?
But the next downturn will have an extremely specific cause, and it is our duty as citizens to see the issue and stop it before it spirals out of control. Which means using our imaginations.