Shocks, Crises, and False Alarms

CHAPTER 3 How Cycles Die

Few economists saw the 2008 crisis coming. The 2020 recession struck without advance warning. In 2022, many rushed to call the next recession—albeit incorrectly. The following year, a US recession was described as inevitable in countless headlines—yet it failed to land in 2023. The lack of predictability, even a few short months out, is stark.

Realistically, the only certainty about future recessions is their uncertainty. Learning from prediction failures, ever better data, and growing analytical sophistication have still not moved us closer to the goal of reliably forecasting downturns. Executives and investors must be clear-eyed that this isn’t going to change.

Yet leaders don’t have the luxury of ignoring these ...