This economy can’t go on forever. GDP may still be growing, but it’s at an anemic rate. And other indicators are piling up that suggest a recession is imminent: The yield curve is inverting, hiring and house price growth is slowing and Philadelphia may win the World Series.
If you follow financial commentary, it sounds like we’re about to hit the inflection point — that moment when the economy turns and we enter a recession; the stock market crashes, inflation deflates, people lose jobs and housing prices tank. But if there has been one thing consistently true over the past two years, it is that what everyone consistently predicted has turned out to be wrong. That’s because we’re in uncharted territory. We have never before turned the economy off, then turned it back on again as we did in the pandemic.
Take high inflation, a phenomenon that the American economy hasn’t experienced in almost 40 years. A chart by chief economist Torsten Slok at Apollo Global Management Inc. demonstrated that everyone has been consistently wrong about inflation and is still getting it wrong. It seems that every month the consensus forecast predicts that this is the month the inflection point arrives and next month inflation will start its quick drop to normal levels. But each month inflation goes higher or stays the same.
