Jan. 2, 2023 — Chosun Ilbo asks about the new year (in Korean).

Q: There are various opinions on the possibility of an economic downturn. Do you have a positive or pessimistic for the economy in 2023? How likely is it that there will be a recession this year in terms of percentage?

JF: A slowdown in the world economy is very likely over the next few years, due to higher interest rates. The outlook is worse in Europe and East Asia than in the US, because they are more vulnerable to high prices for oil and other commodities.  However, I am less pessimistic than the many observers who talk as if a recession in 2023 is certain. I put the odds of a recession in the coming year at no worse than 50 %. read more

December 24, 2022 — Economists spent most of 2022 convincing themselves that the global economy was about to fall into recession, if it wasn’t already in one.  With the year over, the global recession has now been postponed to 2023.

1. Tour d’horizon

In the US, reports that a recession had begun in the first half of the year clearly were premature, especially given how tight the labor market was.  It still is. The chances of a downturn in the coming year are well below 100%, despite the confidence with which many say it is certain.  It is foolish to think we can predict a recession with certainty. But the chances are indeed far above the usual 15 %.  I would put the odds at perhaps 50-50 in 2023 and 75% at some point during the next two years.  The main reason is the rapid raising of interest rates by the Fed (and other central banks), of course, which in turn is attributable to high inflation. read more