The Schumpeter finding is the most consequential one here. If longer expansions don't produce more severe recessions — if the creative destruction mechanism doesn't actually clean up the misallocations from the boom — then the self-correcting assumption that underlies a lot of structural economic policy loses its empirical foundation. The implication worth drawing out is that structural problems don't resolve themselves through the cycle. They persist. Which means the gap between what an economy produces and what typical workers receive isn't a temporary distortion that the next recession will correct — it's a design condition that requires active structural intervention rather than cyclical patience. Goodspeed's data undermines the 'wait for the correction' argument more thoroughly than most readers will notice on first pass.
This century monthly PMI were a godsend for spotting issues quite reliably and early allowing interest rates to be lowered and recessions mitigated or averted.
While a good thing i cant help but feel that the longer a boom the harsher the recession.
On a side note oil price spikes with their knock on to inflation and interest rates have seemed to be the harbinger of most recessions I have witnessed in a blessedly long life.
The oil shock observation is well-documented and consistent with Goodspeed's framework actually — the 1973 oil shock, 1979, 2008 energy spike all fit the exogenous shock model rather than the endogenous boom-bust one. The harbinger isn't the boom producing fragility — it's the shock landing on a system with insufficient buffer to absorb it. The length of the boom matters less than the structural resilience of the households and firms carrying the load when the shock arrives.
Plus 2001 dotcom bubble burst when interest rates spiked up due to inflation caused by oil price incresases...it would have burst at some point but like 2008 the longer it went on the more painful the bubble bursting was.
The Schumpeter finding is the most consequential one here. If longer expansions don't produce more severe recessions — if the creative destruction mechanism doesn't actually clean up the misallocations from the boom — then the self-correcting assumption that underlies a lot of structural economic policy loses its empirical foundation. The implication worth drawing out is that structural problems don't resolve themselves through the cycle. They persist. Which means the gap between what an economy produces and what typical workers receive isn't a temporary distortion that the next recession will correct — it's a design condition that requires active structural intervention rather than cyclical patience. Goodspeed's data undermines the 'wait for the correction' argument more thoroughly than most readers will notice on first pass.
Last paragraph.
This century monthly PMI were a godsend for spotting issues quite reliably and early allowing interest rates to be lowered and recessions mitigated or averted.
While a good thing i cant help but feel that the longer a boom the harsher the recession.
On a side note oil price spikes with their knock on to inflation and interest rates have seemed to be the harbinger of most recessions I have witnessed in a blessedly long life.
The oil shock observation is well-documented and consistent with Goodspeed's framework actually — the 1973 oil shock, 1979, 2008 energy spike all fit the exogenous shock model rather than the endogenous boom-bust one. The harbinger isn't the boom producing fragility — it's the shock landing on a system with insufficient buffer to absorb it. The length of the boom matters less than the structural resilience of the households and firms carrying the load when the shock arrives.
Plus 2001 dotcom bubble burst when interest rates spiked up due to inflation caused by oil price incresases...it would have burst at some point but like 2008 the longer it went on the more painful the bubble bursting was.