Read the assigned Forbes article and summarize in at least 100 words. If we try to avoid recessions it could make recessions in the future worse. There would be worse inflation and an even worse downturn than before. Due to the GDP is growing, and the third quarter of 2022 recession has not hit yet. The Fed communicated in December 2021 its intentions to tighten, and long term interest rates rose before the Fed actually did anything. That argues for recession coming soon after the Fed began tightening. An indicator shows that 54 countries are all tightening their monetary policy. As the world has become more interconnected, changed in policy have greater and quicker impact. After covid many people came into a lot of money, although didnt spend it. Consumers bank balances will return back to normal in roughly 16 months. A recession is likely to hit in late 2023 or early 2024.
Reflect on what we learned in the course, find at least one chapter in the textbook where we discuss the related topic, and explain how the chapter(s) is related to the reported event in the article. Do this in at least 100 words. This article reflected Chapter 3 How to Anticipate Recession and Downturns. It talks about the monetary policy and how that is the most common cause of recession. There is a long lag time between cause and effect in monetary policy. Real estate problems and thrift industry crisi contributes to downturns. It has been argues that monetary policy- changes in the supply- was the primary cause of business cycles. It is best to watch short term interest rates to gauge monetary policy and thus the potential for an ecconomic slowdown. The yield curve is also a good indicator of the direction of monetary policy. At times of low inlfaction, you need to look at money supply.