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“Macroeconomics have succeeded in this original sense: its central problem of prevention of depression has been solved.”
– Robert Lucas, 2003
I am very old to remember that when people thought that the recession could no longer happen.
In the early 2000s, economists such as Robert Lucas and Alan GreenSSSS argued that the traditional recession, which led to a shrinking economy due to a cyclical decline in demand, was becoming a endangered species: less frequent and less dangerous when they were when they were.
It was known as “The Great Moderation”, but as soon as the idea was holding, it appeared by “great recession”.
There was nothing moderate about the 2008 recession: the trough, the US GDP fell 4.3%, the biggest decline after World War II.
However, this Moderation Thesis should not have been discredited, as the great recession is more accurately known as the great financial crisis-a financial itself aimed to have very low with macroeconomics.
Nearly two decades later, the US still did not experience recession in the “original meaning”.
The final traditional, the business-cycle recession returned in 1991, when Fed Chair GreenSspan increased the interest rates by 10.5% and unemployment increased by 7.8%-and even the standards of that time were considered a mild recession.
In 34 years, we had only three recession and they were all triggered by non-distinguished shaking: dotcom bust in 2001 and 9/11, financial crisis in 2008, and Kovid epidemic in 2020.
Recently last week as it seemed that we were essentially leading for one fourth.
But this week, the markets ralled on a growing consent that we will still survive it again.
Which surprises me: If a sudden business cannot tip the expansion of aging in the war recession, what can happen?
Are these only epidemic and banking accidents that now cause recession?
Probably not.
But equally, GreenSspan was probably correct that the recession we have would be less frequent and less serious.
His Concept Mainly the “better monetary policy” was based on a belief, and seems to have been born: if Fed Chair Powell guides America for a soft landing despite an epidemic-inspired inflation and tariff-inscribed uncertainty, I hope that he will go down as the second largest central banker of all times in history (only for inflation, Paul Walker).
Another reason for optimism cited by Greenspan was “changes away from manufacturing services”, and that now, now it can now be demolished: the market action of this week seems to see that the increase of 10x in tariff rates also does not leave the US economy.
“The more flexible an economy,” GreenSspan concluded, “unavoidable, often unpredictable, disturbances and thus its greater ability to self-recover to incorporate the size and results of cyclic imbalance.”
The American economy, he explained, was getting more flexible thanks to automated stabilizers, bus-in-time logistics, deregulation and “depth and sophistication of financial markets”.
More sophisticated market policy makers give better information to work – and the best information, of course, comes as a chart.
So let’s see what they are saying.
This will not happen in this quarter:
Suddenly, the next recession seems far away: Atlanta Fed’s GDPNOW model sees the US economy growing 2.4% in the current quarter.
It is also unlikely in Q3 or Q4:
In 2025, the polymercate audities of an American recession are below 36%.
Is the tariff price now?
Barclays Research (through the Odd Lots Newsletter), it is estimated that the current trade-loving US tariff is now about 14% and analysts of Goldman Sachs said that it will “probably be high for the future of the future.” This is less than expected a few weeks ago, but we may not yet be out of the forest. President Trump Where did you say today Because, because to interact with a lot of countries, he will unilaterally decide tariff rates in the next two or three weeks.
Wages> Inflation, still:
According to Atlanta Fed, US wages in more than CPI are still increasing at 4.3%, which was reduced by just 2.3% in April. The above top row has wage hike for jobs in the top line, which may be to fall further: Wall Street Journal noted Two-thirds of American workers believe that they are overped this week.
Nothing of Apropos:
This is from 2024, but I found it only this week: an Epsos survey found that Asian (and some Latin American) countries are “excited” about AI while Europe and Anglosphere are “nervous.” Let’s look back in a decade or two decades and see if it is related to the growth rate. (I suspect that it will happen.)
Why which should be for free trade:
John Letiery noted that the introduction of globalization (marked by NAFTA in 1994) was a coincidence with a trend change in male earnings: after two decades fall, the male wages started growing again.
Why should everyone be for free trade?
Letiery also found that, starting with NAFTA, wages for the lowest fourth of the earners And sharp In comparison to wages for top IV. If, like me, you enjoy this type of story violations, then Full thread One should read on business.
Other deficit problems:
Current home budget will be added to the proposal $ 3.3 trillion For federal loan through 2034. This will probably not pass the Senate, but it seems to be a safe condition that whatever eventually does it will only be more responsible.
In good times and bad:
The really bad news about the US budget is not that it is a big loss – it is a big loss while the economy is booming. What is this chart going to look like in the next recession? (If ever one.) Also, if your goal has to be reduced Business Loss, running a trillion dollar Budget Year -Dar -Sala is a deficit, uh, no way to do so.
Losses are good for business, however:
Both 60/40 portfolio of Global Equity (Orange) and Global Stocks and Bonds (Purple) made both high -high places today. Global equities pre-US (Blue) made the highest highest.
Who said that investment is difficult?
If we do not have to worry about traditional recession, it may not happen.
There is a great weekend, medium readers.
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