What You Know About Recessions Could Be All Wrong

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Everything we think we know about recessions is wrong—or at least mostly wrong—according to ExxonMobil Chief Economist Tyler Goodspeed. He argues downturns aren’t the inevitable result of overheated booms and don’t arrive simply because expansions last too long. In his new book, Recession: The Real Reasons Economies Shrink and What to Do About It, which spans 350 years of US and UK economic history, Goodspeed contends recessions are typically the product of sudden, overlapping shocks—particularly to energy and food—that derail otherwise healthy expansions.

Speaking on this episode of Trumponomics with host Stephanie Flanders, Goodspeed, the former acting chairman of the White House Council of Economic Advisers during Donald Trump’s first term, contends the historical record offers a measure of reassurance as markets shudder at the US-Israel war with Iran and its widening consequences. It takes more than a single crisis to push a modern economy into contraction, Goodspeed argues. But the risk rises sharply if a conflict disrupts physical oil supplies for weeks or months, evoking the energy crises of 1973 and 1979.