Sunday, August 11, 2019
Opinion: The global economy is probably in recession, with most cyclical indicators showing business activity is flat or falling.
Recessions become obvious only once they are well established given the lagging nature of most economic data. And end-of-cycle recessions are usually impossible to distinguish from mid-cycle slowdowns until well after the slowdown has started.
The arrival of a recession is always controversial at the time and usually missed by most forecasters, as the leading business-cycle economist Victor Zarnowitz noted. Policymakers are reluctant to announce a recession for fear of harming consumer and business confidence and worsening the downturn ("Business cycles: theory, history, indicators and forecasting", Zarnowitz, 1992).
But almost all the main economic and industrial indicators that provide a reliable guide to the business cycle confirm the economy has already slowed severely.
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