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Defining a Recession
- A recession means the economy actually contracts, typically measured by GDP and unemployment.
- The NBER's recession declaration is accurate for history but too late for real-time decisions.
Mixed Economic Signals
- Soft data like consumer and small business confidence suggests recession, but hard data like unemployment and inflation doesn't yet.
- The tariff uncertainty is causing unusual real-time reactions affecting the economy's slowdown.
Market Bets Signal Recession Risk
- Prediction markets show over 50% chance of recession by year-end, influenced by real money stakes.
- Market beliefs can create self-fulfilling prophecies where behavior leads to actual recession.