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Third Time Unlucky

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Third Time Unlucky

Recession in 2014?

AEI,

5 Minuten Lesezeit
5 Take-aways
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Was ist drin?

Economic indicators and history point to recession in early 2014.

Editorial Rating

6

Recommendation

The Fed has been lucky twice, but fortune won’t smile a third time. Recession will recur in 2014 with tax and benefit cuts the only way out. These oft-repeated neo-conservative maxims will most likely not lead the Fed to change its policy. Economist John Makin asserts that the financial sector should undergo deregulation and – post-Lehman collapse – that offends many. Still, getAbstract recommends Makin’s thoughtful take on business cycles.

Summary

The US economy has been in recovery since 2009. Its expansion survived two “swoons” (growth of 0.1% and 0.4% in the first quarter of 2011 and the fourth quarter of 2012, respectively) but proved anemic in terms of labor and consumer demand. Even so, the US Federal Reserve predicts GDP growth of between 2.5% and 3% in the near term. Current opinion holds that the US faces a period of sustained expansion. This optimism ignores economic history. The US economy is returning to a more normal business cycle pattern that – apart from notable anomalies – held sway from 1854 to 2009 and was characterized by shorter periods of growth and longer periods of relapse. ...

About the Author

John H. Makin is a resident scholar at the American Enterprise Institute.

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