How to Assess True Macroeconomic Risk
Models and forecasts can be seductive, but it’s time for executives to reclaim their economic judgment. by Philipp Carlsson-Szlezak and Paul Swartz
Summary.
Over the past five years corporate leaders and investors have had to digest a rapid succession of macroeconomic shocks, crises—and false alarms. In 2020, when the pandemic delivered an intense recession, leaders were told it would be worse than 2008 and potentially as bad as the Great Depression. Instead a fast and strong recovery unfolded. In 2021, when supply bottlenecks and strong demand sent prices soaring, a common view was that runaway inflation would take us back to the ugly 1970s. Instead inflation fell from 9.1% to just above 3% in a year. In 2022, when U.S. interest rates climbed, a cascade of emerging-market defaults were predicted—but they didn’t materialize. Also in 2022, and again in 2023, public discourse cast an imminent recession as “inevitable.” Instead a resilient U.S. economy not only defied the doomsayers but delivered strong growth.