It has been said that Economists have forecasted 9 of the last 5 recessions. All jesting aside, the media, politicians, business and workers live in a perennial fear of the “next” recession. After seven years of a zero interest rate target, Janet Yellen pulled the trigger and “declared” to the world that the American Economy was on a path to “normalization” by raising rates 0.25% on December 16th, 2015 and marking the death of the “Great Recession” once and for all. But watch out, the bear is on the prowl!

Economists tend to over complicate everything. As Janet Yellen keeps telling the world, the next actions of the FED are “data dependent.” Using the data, there is no reason to over complicate the picture that is painted before us, so let’s take a logical look at the economy and when the current business cycle is going to end.

Put pithily, a recession is a contraction in the business cycle that slows economic activity. According to academic definition, to have an “official” recession the economy needs to have two successive quarters of contracting GDP growth. According to the IMF, based on quarter-on-quarter changes to seasonally adjust real GDP, the Great Recession in the United States only officially lasted 12 months, from Q3- 2008 unit Q2- 2009. Most Americans would likely agree that the Great Recession lasted longer than 12 months; some would argue that we have yet to get out of recession, while others may never have felt the pain of a recession at all. No matter where your pain scale was for the Great Recession, as we enter 2016-the question now becomes when will the next recession arrive?

There will be an American recession in 2016. For Asia, Europe, Russia, Canada, Australia, South America, Central America, and across the Middle East- the recession is nearing or is here. The “next” recession will be a global recession, and America will be pulled into recession in 2016.

Recession is not stocks, bonds, oil, or commodities falling by some magic number. Recession is the contraction of a business cycle from one period to the next. Recession can be state specific, city specific industry specific, or product specific, but when enough of those specifics culminate, we get domestic recessions, and when enough of those domestic recessions culminate, we get global recession. Recession has been spreading across countries and continents, and tactical antibiotics that the globe has been using to ward off the recession will not protect the United States to fight off the recession flu in 2016.

The general fault of the Great Recession was a “Banking Crisis.” When we dig into “specifics” of the banking crisis, we extrapolate credit default swaps, which went bad because they were backed by bad mortgages, which were taken out because people bought houses in an economy that used residential real-estate to expand out of the recession caused by the “Dot-Com Bust.” Growth in computer technology and the expansion of dot-coms grew America out of the prior recession, and the list goes on and on, boom and bust, boom and bust.

Reason number one that America will go into recession in 2016 is that the business cycle that expanded the economy out of the Great Recession was largely driven by expansion in oil and commodities to fuel the growth in China and other emerging markets, and those markets are stagnating or collapsing!

The problem is that China’s recent economic rise has been facilitated by a massive and unsustainable stimulus campaign. China can only build so many airports, skyscrapers, roads, high speed trains, and shopping malls before the entire infrastructure that is needed is developed. No emerging nation has ever tacked on debt at such a breakneck speed as China has done since 2008, and a rapid increase in debt is the single most reliable predictor of future economic slowdowns and financial crises manifest saliently. China has reached their tipping point of exasperation, China is moving to a service and consumption economy and away from an economy of manufacturing and that is reducing demand in commodities and energy, which will trickle over to the rest of the globe that supply inputs that translate into Chinese outputs.

Reason number two, falling commodity demand will cause earnings pain and bankruptcy. Cheap prices are good for consumers, but very bad for producers. Most recessions tend to hit low and mid income earners the worse; this recession will be different. This recession could be good for low wage earners that spend a large part of their disposable income on things like gasoline and food, which are falling. At $1.60/gallon for gasoline vs $2.20 last year, 200 million Americans are saving almost $90 billion a year on gas alone and another $90 billion in other energy costs with another trillion dollars in savings (or losses if you are a producer) around the world. In recent history, it has been been consumers padding the bottom line of producers, but this recession will see producers, banks, and stock & bond holders having to pony up for the lost margins. As profits decline, expect job losses and decreased capital spending. Falling oil is hitting upper level jobs in pockets of America that is employed in the oil and gas industry, but it will be crippling to high networth individuals and retirees that invest in domestic oil and gas. Bond holders and banks that invested in oil, gas, and commodity debt will take massive hits when firms are forced to restructure balance sheets, and this will trickle over to all sectors of the economy as the losses get spread around. Just a few straws from large commodity bankruptcies could be all it takes to break the camel’s back.

Reason number three: weak corporate earnings and industrial production. Low commodity inputs should be great for corporate profit, that is, if America actually profited. US industrial production (IP) began contracting year-over-year in November 2015 (–1.29%) year-over-year, and deepened in December to (–1.8%) year-overyear. A year-over-year of -1% of more has been linked to a recession every time it occurred since the early 1960s, and If a US recession has not already started or does not start within the next 12 months, with a the current year-over-year plunge of (-1.8%) it will be the first time since 1920 that we have not entered recession with a move of this severity.

America is a service economy, and the two largest US companies are Apple and Google. America needs stability and/or growing industrial production during an expansion phase of a business cycle. Industrial production is not expanding, and we cannot expect the domestic economy to survive on revenue from the next IPhone or from internet advertising; the United States is ceremoniously heading for a recession.

Reasons 4, 5 and 6 that the US is heading for a recession in 2016 is jobs, jobs, jobs. As the saying goes, ‘a recession is when your neighbor loses his job, a depression is when you lose your job!’ The headline numbers for jobs has actually not looked too bad as we are nearing “full employment,” however when you really dig though the numbers, they convey an aberration. The real story in jobs is that people in the prime wage working group (age 25-54) are losing jobs, and the participation rate for workers age 25-54 is only about 80% compared to historic peaks in the 85% range. While we may see an expansion in the total number of jobs, the quality is not there. The bulk of job growth is in the senior job market (age 55 and above) and in the hospitality and food services market.

The thing that matters is the income generated by the jobs market, not the number of jobs. Quality jobs from prime wage earners are eroding. As you can see from the above chart, tax withholding is declining-which conveys the true story that wages are not increasing with the growth of the headline jobs numbers. When citizens do not have solid, well-paying jobs it is very difficult for an economy to expand, and there is a continuum, that when this happens-the economy shrinks, and what happens in a shrinking economy? That’s correct, recession.

Countries around the globe are already in recession. Recession will spill over from regional pockets and spread root to whole continents, becoming ubquitous and grip the world in 2016. The United States just so happens to be part of this ever shrinking world and as we have outlined in these six simple, salient reasons, recession will reach the US economy in 2016. As we near recession, continue to keep your eyes on governmental debt from around the globe, as the next chapter expounds how countries can lever fiscal and monetary policy to stimulate out of the 2016 recession and remain solvent.