/ TAG Recession

In contrast to recessions driven mainly by a demand shortfall, the challenge posed by a supply-side-driven downturn is that it can result in sharp drops in production, generalized shortages and rapidly rising prices.

The COVID-19 outbreak seems to have raised the odds of a global recession dramatically. But even if no downturn materializes in the near term, the outbreak, together with President Donald Trump’s trade policy, may herald the end of a peaceful and prosperous era.

As we begin 2020, we want to share some of the stories we and our readers loved the most last year.

Now that the old rules governing macroeconomic cycles no longer seem to apply, it remains to be seen what might cause the next recession in the United States. But if recent history is our guide, the biggest threat stems not from the U.S. Federal Reserve or any one sector of the economy, but rather from the White House.

An economist unravels the seeming contradiction between stocks near record highs and growing fears of a recession.

Unlike the 2008 global financial crisis, which was mostly a large negative aggregate demand shock, the next recession is likely to be caused by permanent negative supply shocks from the Sino-American trade and technology war. And trying to undo the damage through never-ending monetary and fiscal stimulus will not be an option.