(Roughly) Daily

The “R word,” unpacked…

It’s being whispered and murmured about. The president is facing questions about it. Business leaders and investors are already bracing for it. The specter of recession is once again rearing its monstrous head.

It’s feasible that the economy could chug along without any bumps or crashes. But boom-and-bust cycles remain a seemingly inescapable feature of capitalist economies. Some countries have done well avoiding busts. Starting in 1991, Australia had a run of almost 29 years without a recession, the longest stretch of economic growth of any nation in modern history. That ended in 2020, when the pandemic led to a big contraction — and Australia (briefly) succumbed to the beast.

While Australia had zero recessions between 1991 and 2020, the United States had two, a mild one in 2001, amid the dotcom crash and the 9/11 terrorist attacks; and a catastrophic one known as the Great Recession, between 2007 and 2009. Since 1854, the first year for which we have official economic data, the United States has experienced 35 recessions.

The National Bureau of Economic Research’s Business Cycle Dating Committee is the official body that keeps track of recessions in the U.S. The committee has traditionally defined recessions as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”…

Recessions– what they are, what they aren’t, and how they happen: “Fear The Vibe Shift: Are We Entering A Recession?,” from Greg Rosalsky (@elliswonk) at Planet Money (@planetmoney).

And for a dive into the vibe in question, see Derek Thompson‘s (@DKThomp) examination of why many Americans believe that they’re personally doing well, even as they feel that the country and the economy are going to hell: “Everything Is Terrible, but I’m Fine.”

See also: “There are 2 very different kinds of recessions—and the U.S. is likely headed for something totally different than 2008” in @FortuneMagazine (source of the image above), and “A recession in America by 2024 looks likely– It should be mild—but fear its consequences” in @TheEconomist.

* Harry S. Truman

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As we batten the hatches, we might send carefully-considered birthday greetings to Robert Aumann; he was born on this date in 1930. An economist and mathematician, he is best known for his contributions to game theory, especially for his work on repeated games (situations in which players encounter the same situation over and over again). He developed the concept of correlated equilibrium in game theory, which is a type of equilibrium in non-cooperative games (like most of those in our economy), a more flexible version than the classical Nash equilibrium.

For these and related contributions to game theory, he shared the 2005 Nobel Prize in Economics.

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