All posts in category Recessions

There is no reason to worry – yet

The Fed announced the CPI for May: 0.6% is still at a fast pace. But I don’t think we should worry. The rates announced so far match Claudia Sahm’s predictions: If we look at the PCE index, inflation has started to made-up its dip in 2020, but this does not necessarily imply that tightening is […]

This is not our grandfather’s recession

Scott Sumner wrote a post that the Keynesian model could not explain the recession we were in recently. Although I fully agree with Sumner, I intend to emphasize a few points. Let’s first look at this graph showing PCE and disposable income: The Keynesian models we have do not show that NGDP will drop 33% […]