Beware Misleading Recession Forecasts—But Be Prepared

Beware Misleading Recession Forecasts—But Be Prepared

The risk of recession is increasing People are worrying about recession with good reason: inflation is up, interest rates are rising and the Ukraine war hurts the global economy. But the scary headlines reflect some misleading reports. Yes, there is significant risk, but not as much as some reports, and not as immediately. Some economists always predict doom and gloom. When a recession comes, they point to their accurate forecast, ignoring the many times they cried wolf. But today more mainstream economists are worried. Business leaders should take notice, but some of the press reports are not to be believed. Fortune Magazine, a usually reliable source, wrote, "A poll from Reuters, conducted between April 4 and 8, found that one in four economists believe the U. S. will experience a recession this year, with that number rising to 40% over the next 24 months." This article is hugely misleading. What the Reuters piece actually said was "Indeed, respondents to an additional question gave a median one-in-four chance of a U. S. recession in the coming year, rising to 40% over the next 24 months." To be clear, if a group of economists is each asked to estimate the risk of