Don’t Let Your Babies Grow Up to Be Macroeconomists
Why did so many economists wrongly predict that there would be a recession in 2023? Tyler Cowen (an economist who had thought there was a reasonable chance of a recession) offers two main reasons (free read!):
1. Macroeconomics is hard.
2. When the Federal Reserve raises rates as sharply as it did over the past 20 months, it’s pretty reasonable to expect a recession.
“There is a reason that so many economists had been predicting a recession — and it is not because they are out of touch, or repeating talking points from Donald Trump’s presidential campaign,” Tyler writes.
“They predicted a recession because that is what experts such as [Janet] Yellen, [Paul] Krugman, [Christina] Romer and many others had been teaching for decades.”
It’s not that those teachings are necessarily wrong, either. They were just wrong … this time.
Justin Fox Bloomberg 26 december 2023
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