GM64: Why the Economy is Vulnerable to Recession ft. Claudia Sahm

Jul 3, 2024

Claudia Sahm, Chief Economist at New Century Advisors, discusses the vulnerability of the economy to recession. They analyze conflicting macroeconomic data, the decline in inflation, and the shift towards active fiscal policies. They also explore the implications of debt sustainability for the next US administration.

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Intro

00:00 • 3min

Exploring a Guest's Journey into Economics and Public Policy

02:56 • 2min

Preparing for Recessions and Interpreting Economic Data

04:29 • 19min

Navigating Uncertainties in the Economy

23:53 • 17min

Evolving Fiscal Policy and Economic Strategies

40:44 • 13min

Exploring Alternative Perspectives in Economics and the History of Economic Thought

53:20 • 4min

Alan Dunne is joined by Claudia Sahm, Chief Economist at New Century Advisors and creator of the Sahm Rule, to discuss the current macroeconomic outlook. They explore the state of the US labour market and what the Sahm Rule reveals about the economy's current condition. They discuss the conflicting signals in today’s macroeconomic data and hear why Claudia believes the economy is more vulnerable to recession now than in recent years. They also discuss the decline in inflation over the past year, evaluating whether it was influenced by monetary policy and its implications for future policy decisions. Finally, they examine the shift towards more active fiscal and industrial policies and consider whether debt sustainability will become a key issue for the next US administration.

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Episode TimeStamps:

02:22 - Introduction to Claudia Sahm

04:26 - The background behind the Sahm Rule

08:34 - Does the current data call for a recession?

12:37 - Putting the data together

18:16 - Is the unemployment rate the most reliable indicator for recession?

23:51 - What can we rely on as investors?

29:48 - What is unusual about this inflation cycle?

35:32 - The balance of the dual mandate

40:42 - The state of physical policy

45:32 - The growth picture from a long term perspective

50:32 - The positive sides of inflation

53:17 - Book recommendations and advice for other investors

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