Recession? There isn’t evidence that we are in a recession, or even close, says Laurence Kotlikoff.
Kotlikoff is a Professor of Economics at Boston University. He said recently that during adverse economic events, people feel can poorer according to what they read and hear in the media – even though nothing has changed in their lives.
“I don’t think we’re in a recession now, or have we been for the last six months, because unemployment is still very low. If you look at the facts, there’s no evidence of recession. Yet everybody in the newspaper is writing about a recession. Bad news sells.”
Kotlikoff says that if news organizations are talking about a recession, every other news organization feels compelled to talk about it too.
Kotlikoff said that academic research shows that in the past, a decline in home prices has led to a decline in aggregate spending from consumers. This is because people felt poor on paper. But was this the actual reality?
“Psychology matters a whole lot because people aren’t economists. They are not trained to think the way I’ve been trained to think. So, they get things wrong. They listen to what other people are saying – and those other people are focused on the wrong things as well!”
Recession? We are talking ourselves into it
Kotlikoff says people discuss how mortgage rates are high, and how inflation is high, but they don’t discuss how real mortgage rates have gone down. “That’s not a conversation that’s taking place. People say house prices are dropping. But did anything change? Did your house fall apart? Did you sleep in the same room last night? And did anything really change within your l
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