The Fed Misunderstood the Economy

How serious a threat to the economy is the current turmoil in the banking sector? What are the prospects for a soft landing—or more turbulence ahead? How should we think about the challenge of combating inflation? To discuss these questions, we are joined by Harvard economist Jason Furman, who was deputy directory of the National Economic Council during the Financial Crisis and then served as Chairman of the Council of Economic Advisers in President Obama’s second term. In this Conversation, Furman shares his candid assessment of the current challenges in the macroeconomy: Unless you have [a] soft landing, which I think is unlikely, there’s a recession out there. I used to think the recession was more second half of this year or first half of next year. The banking crisis may move that forward, he says. Yet Furman explains how dynamic is the situation, and lays out several plausible scenarios as well as his views on the key indicators to look for in the months ahead. Furman also reflects on the American economy more broadly, and shares his perspective on the future of inflation and interest rates, debt and deficits, productivity, and immigration.