Why Experts Keep Getting the Economy So Wrong
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Why do economic experts keep predicting recessions that never happen?
In 1966, the economist Paul Samuelson said that the stock market predicted nine out of the last five recessions. Kind of a weird joke. He's saying that every single time the stock market goes down, people freak out, predict a recession, and about half the time they're wrong. 60 years later, I think if we were going to update that sentiment for a modern audience, we'd have to say that economic commentators have predicted something like 100 out of the last two recessions. I mean, think about all of the times you have heard that this economy is doomed just in this decade alone, removing the first few months of COVID, of course, when the government basically put the whole economy in a cryo chamber to stop the spread.
In 2021, inflation started to surge out of control. Yeah. No recession. Then the Federal Reserve responded by raising interest rates faster than any time in modern history. Still, no recession. Then the Russia-Ukraine war pushed up commodities prices, but no recession. Then Donald Trump becomes president, announces some totally audacious, unprecedented tariff regime on Liberation Day 2025. No recession. Then AI takes off. Still no recession. Then the war in Iran raises gas prices and the deficit is rising alongside data center debt and the bond market's a mess. And still, according to the most up to date estimates of economic growth, Things are just kind of chugging along. Consider for example GDP growth.
Last quarter, real GDP growth was two percent. The last quarter of Biden's presidency, it was two percent. Its average in the entire decade of the twenty tens. Just two percent. Or take unemployment. In the last month before COVID, during Trump's first term, the unemployment rate was just about 4%. It's average under Joe Biden? Just about four percent. And today, after the tariffs and the wars and the AI and the gas prices. Four point one percent. I think this is very strange. I mean, think about all the economic news of the last few years. Think about all the op-eds you've read, all the videos you watched, all the podcasts you listened to, maybe including guests on this show, that continually predicted imminent doom.
The AI bubble is gonna pop. No, it it actually won't pop because AI is gonna grow and take all the jobs. No, tariffs will crash the economy. No, the Iran war. will crash the economy. No, the the deficit will crash the it's nonstop. How many shows do you listen to that actually go back? and count the recessions we predicted That never happened. How many shows go back and ask why are we getting the economy wrong and wrong and wrong again? What are the experts missing that they always seem so certain that everything is just about to go to hell? And meanwhile, national economic reality as it actually exists is so eerily stable. 2% GDP growth, 4% unemployment, like it's practically frozen in place, sealed in amber.
I don't know. I I don't know why the economy is so resilient to these predictions of doom. But I'm hoping today's guest does. Jason Furman is an economist who often does the heavy lifting of answering my most unwieldy economic questions. Today's unwieldy question. Is. Why do economic experts keep getting the future wrong? Why is economic commentary so pessimistic? And what does it say about the US economy that reality keeps defying the doomsday forecasts? I'm Derek Thompson. And this is Plain English.
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Chapters
8 chapters
1
Why do economic experts keep predicting recessions that never happen?
0:05–6:24
2
What did Jason Furman identify as the main reasons the U.S. economy stayed resilient?
6:24–13:32
3
How did the Fed’s rapid rate hikes fail to trigger a downturn?
13:32–19:57
4
Why were the 2022‑2023 tariff and trade warnings largely inaccurate?
19:57–25:52
5
How did the Iran‑Hormuz oil shock affect (or not affect) U.S. growth?
25:52–31:43
6
What is the “100‑leg stool” analogy and how does it explain economic stability?
31:43–38:40
7
Why does the podcast argue that trends matter more than isolated events?
38:40–44:42
8
How might AI and future productivity gains reshape the economy’s long‑term trend?
44:42–56:39