"Nearly half (48.6%) of US CFOs believe that the US will be in recession by the end of 2019
and 82% believe that a recession will have begun by the end of 2020. CFOs are even more
pessimistic in most other regions of the world: Africa (97% believe that a recession will have begun no later than year-end 2019),
Canada (86%), Europe (66.7%), Asia (54%), Latin America (42%)"
Where are the specific examples, you ask? There's an entire podcast devoted to smashing his (often-contradictory) arguments: https://contrakrugman.com/
And of all the different intellectual pursuits economists seem to have the easiest time skirting around issues when the data doesn't match their idealized worldview.
Krugman: A recession seems possible now. I'm most worried that we raised interest rates too soon and won't be able to lower them enough to restart economy. Also current administration isn't super competent, if something complicated happened they would make mistakes.
Headline writer: Krugman promises recession.
Don't just read the headline, dig in to what the competent people are actually saying.
The federal funds rate in mid 2007 was 5.25%, it's now at 2.4%. (https://fred.stlouisfed.org/series/FEDFUNDS).
Also the Bush administration gets a lot of hate, but his and then Obama's economic team did an awesome job managing something that could have been very very bad.
The dip "out" of recession interest in mid 2008 is interesting. Also interesting that you can spot 2011, when "double dip recession" came into popularity as a buzz-phrase. (see for example at the time: https://www.nytimes.com/2011/09/08/business/economy/american...)
The smart money has been getting out of the market for some time. But you can't sell unless someone else wants to buy. So at the end of the business cycle there is usually a blizzard of "the economy will keep doing good" articles contrary to common sense, trying to get the rubes to buy so the smart money can bail, await the crash, and then buy the stock back at pennies on the dollar.
 Check the stock market or some other favorite grown metric. Things hit a peak level about a year ago and have been mostly flat ever since. This is what the peak of a growth cycle looks like; every one can see that.
The OP is just asking if there is a way to predict the likelihood of a recession by using media reports. The answer could very well be no, but it is nothing like saying that google searches for hurricanes cause storms.
The correct analogy is that it would be like searching for media reports of incoming hurricanes in order to tell if there was a hurricane coming. I imagine that method would work well for telling if a hurricane is coming (though it would be more straight forward to just look at the weather report)!
I have a feeling this method wouldn't work well for predicting a recession though.
That was the clear implication I took from the phrasing. And it seems to be confirmed by a bunch of other posters here.
Again I ask: everyone can see that we're at the peak of a growth cycle, why is it notable or surprising that pundits are predicting that we'll hit the downward slow soon? It seems it's only notable if you're trying to blame the recession on the pundits.
You say it is obvious that we are at a peak of a growth cycle. Maybe you are right, but you also could very well be wrong... People have been saying we are at a peak for several years now.
My point was mainly that your analogy was a stretch.
Likewise lots of people were predicting a few years solid growth starting in 2009. And they were right too!
And all I'm saying is that it's more likely that they were right because economic cycles are broadly predictable on the multi-year scales and not because Paul Krugman has some kind of magical power to produce a recession just by talking about it.
Contrary to your assertion, I don’t necessarily see a clear signal in the stock market (which only loosely correlates with the economy) or other economic indicators. Job growth is still somewhat strong, for example. And many a temporary flattening of indicators have given way to another run.
Of course as day follows night, recession has followed expansion. But the cycle just isn’t as regular as the 24h day, or the 12 months that make a year.
Just as we have become better at predicting the weather or the path of hurricanes, economists have become better, but not perfect, at predicting, and even softening the blow of, recessions.
OP was merely asking if news archives could be used for a sort of crowdsourced signal, a valid and interesting question. Google trends might also be interesting to look at, although I haven’t heard much of their flu prognosis in recent years.
Another example are quack cures: unusual cures are tried when people are at their sickest, then people improve, and they credit the improvement to the cure. Almost everybody who is very sick gets better, though, and the rest are too dead to denounce the cure as fake.
The counterfactual I provided is just an obvious example of the fallacy. The real meat of the argument was in that post too -- it's far more likely (Occam and all) that people are predicting recessions because every dummy can see that a recession is likely following the end of an expansion than that there is some kind of magical effect on public thinking.
This is just politics. You don't want your favored entity to get blamed for a recession, so you find a way to make that recession the "fault" of your political enemies. But no, growth cycles are cycles for a reason, and we don't need "fault" to describe what happens.
2. The "cause" of 2008 was not media reports, but years of actual bad behavior by banks. Now if you want to rewrite history, awesome, but be transparent about it.
As in, there's a correlation between heatwaves and A/C use. You could hypothesise that A/C cause heatwaves, but the simpler and fairly obvious explanations is that people use their A/C more during heatwaves.
Assuming you put down 20k on the 100k homes, you've returned 500%. That is incredible, but also fairly common story from the past few years. "I made it rich with real estate!" "How?" "Easy, buy at a historically low price."
The word is out, it's not a secret to success anymore. There is a pile of money out there waiting to invest in under-priced homes. This drives prices up! Because of this, a recession will not trigger a home price drop.
Property values will likely remain stable/inflated until something happens to break whatever math it is that keeps investors invested. It's the massive stockpile of homes investors gobbled up in 2009-12 that need to be released back to the market. It is a self-perpetuating cycle, people rent a home because home prices are too high due to investor held inventory. Then investors keep renting their asset out because renters don't graduate to buying.
I could be way off, or have missed something obvious, but I don't think real-estate is going to be the big moneymaker form this recession unless something happens to dramatically increase inventory in places with jobs.
An alternative mentioned in sibling comments -- which I completely agree with -- is to wait it out holding cash. This assumes you trust there won't be inflationary pressures. Depending on viewpoint there should be lots of that or deflation. It also assumes you're able to trust some institution to hold your cash and making it available when you need it. IMO that is less of a given, considering current private debt levels, if shit really hits the fan hard. But you never know, perhaps we can survive yet another 2008 type of crisis, and kick the can further down the road yet again.
Unless you have a PhD in quantitative finance, it's usually best to take it as axiomatic that you don't have a knowledge-based edge in the stock market, or anything similar.
But seriously though, the "Great Recession" was the largest downturn since the Great Depression. Do you expect the next one will be as bad or worse?
I'm not actively seeking to make money off a downturn aside from contributing to my 401k, which invests in a diversified mutual fund (I can't invest more actively for regulatory reasons). My main goal if that happens is to keep my job.
media.autoplay.default (1 for disabled, 2 for site by site basis)
> So we are very probably looking at a global recession, with no end in sight. I suppose we could get lucky somehow. But on economics, as on everything else, a terrible thing has just happened.
Are you sure you want to make investment decisions based on his predictions?
"The economic fallout of a Donald Trump presidency will probably be severe and widespread enough to plunge the world into recession, New York Times columnist Paul Krugman warned..."
Glancing over 3 year's worth of employment, GDP and stock data, it seems safe to say Krugman is sometimes simply wrong. Very, very wrong.
Krugman is not credible.
Dragging this quotation out anytime Krugman says anything is weak and lazy. Pick any person who routinely makes a broad range of public predictions about what will happen in the medium term, and you will find some they got hilariously wrong.
"But what is certain at this point [12/2017] so far in Trump's presidency is that anyone who sold stock on the basis of predictions by liberal "experts" like Larry Summers or Paul Krugman or Steve Rattner missed out on a 30%-plus surge in their financial wealth. At some point the market will take a tumble and these discredited gurus will shout "see."
“The stock market has forecast nine of the last five recessions.”
Paul Samuelson (1966)
Regardless, I don't think we'll be seeing anything like a recession this time around - the Fed has learned from their screwup in 2008 and won't make the same mistakes again.
Edit: A slowdown in growth as a result of e.g. problems in Europe or China might happen, but this would not be a "recession" as commonly understood. It would look very different in the data (inflation, unemployment rates and the like) and the appropriate policy response would be completely different as well.
Edit 2: And the Fed did a lot more than just "lowering interest rates" in a direct, trivial sense (and they _had_ to, since interest rates _were_ indeed quite low even before the Great Recession was widely acknowledged as such. I'm not sure why people - including Krugman - are now suggesting otherwise). I don't think many people would disagree that these policy measures were highly effective, but Krugman used to be a very vocal skeptic.
Interest rates stayed low, companies sat on huge mountains of cash and just paid themselves more or invested in press releasable tech companies and other decorative unprofitable baubles, the markets rose into the stratosphere, and now there will be a reckoning.
After they were lowered to almost the zero bound there was not much else to do.
This one around, they are already low before the recession hits. The situation is not the same, hence the Fed has less wiggle room.
And thanks to the tax cuts, and a deficit nearing $1 trillion in a boom economy, there will be less wiggle room for fiscal stimulus vs tax cuts or spending as well, because the deficit will skyrocket if government revenues fall in a recession.
Krugman is being consistent and logical here.
They will not make the same mistakes again but different ones (not sure if I would even call it mistakes. In the end the Fed can't do much in a world of outrageous debt). Our whole economy is not set up to be stable. We push until things blow up, deal with the consequences, and then we start pushing again.
Just make sure the person in charge isn't out of touch and surrounded by people too sycophantic to call out mistakes. Also, don't use green screen improperly and re-use the same static shots. Also, save the lightsaber for key dramatic moments.