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Economists see recession coming, so maybe it’s not

Markets have a better record at predicting downturns — but sometimes the inevitable never happens

Ruchir Sharma
Published Tue, Nov 8, 2022 · 06:31 PM

ECONOMISTS tend to think in small incremental steps, missing big turns in the story, which helps explain why their consensus view had not forecast a single US recession since records began in 1970 — until now.

For the first time, economists as a group not only expect a recession in America in the next year, but give it a very high probability, more than 60 per cent. Given their record, it’s worth asking whether the consensus is, in fact, unlikely.

With inflation at four-decade highs and central banks raising rates aggressively and in a way that has seldom been so well telegraphed, a recession does seem inevitable. Still, as John Maynard Keynes once warned, “the inevitable never happens and the unexpected constantly occurs”.

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