Austan Goolsbee: You Never Know When a Recession Will Sne...

Austan Goolsbee: You Never Know When a Recession Will Sneak Up on You: "The 2001 recession developed when the internet bubble popped.... But... the internet accounted for, at most, about 2 percent of the economy then. If we use the logic we���ve been applying to trade wars and government shutdowns, it would seem that popping the internet bubble shouldn���t have been enough to cause a recession. But it did...

...The reason it did was that the pop freaked out people outside just the internet sector.... Virtually every recession in the last 40 years coincided with a signal of fear, like a significant drop in consumer confidence. Sometimes confidence fell and didn���t spiral into recession, but all recessions have started with a confidence spiral.... Let us all hope for excellent jobs numbers in the months to come, along with a rebound.... But it would be a mistake to be overconfident.... If something scares people enough, it can start a recession, and you probably won���t know until it���s too late.... The great pitcher Satchel Paige once advised: 'Don���t look back. Something might be gaining on you'. Had he been an economist, he might have added, 'And don���t start a trade war, either'...

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