That is the topic of my latest Bloomberg column, and here is one excerpt:
How worried should we be? There is a common and popular tradition that suggests an economic recovery is a harbinger of bad times. Perhaps a recovery has a kind of expiration date, just like the milk in your refrigerator. After some period of time, it simply goes sour, no matter what you might try to do to keep it fresh.
The good news is that the old macroeconomic saying — “Expansions don’t die of old age” — is basically true. Most academic literature supports that conclusion. There is always a possibility that an expansion can turn into a recession, as remains the case today, but the mere fact of an expansion should not be cause for worry.
In 2010, experts were asking whether the economic recovery would run out of steam. Instead, it continued until Covid intervened — and right before Covid, the economy even accelerated. In 2021, the OECD worried that the US recovery from the pandemic might be slowing down. That worry also turned out to be wrong.
Again, the proper conclusion is not that recession is impossible. It is that recession does not become more probable as the recovery proceeds.
Please do not commit the mood affiliation mistake of taking this as a verdict on the Biden administration, one way or the other. It has been known for a long time that the influence of the President on the economy is extremely limited. Furthermore, to the extent the Biden people are Keynesian (and mostly they are), that is the view that implies we should be in a recession right now. Most likely the ongoing recovery is a mix of underlying positive real economy momentum, and Sargent/Lucas credibility mechanisms for getting the inflation down.
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