Breathe.

Some calming macro thoughts today. We deserve it.

Source: Getty Images.

No hot takes today on the Consumer Price Index. If you must, here’s a video of my interview yesterday with BNN Bloomberg.

Instead, let’s all take a deep breath. We will argue about inflation and a recession this year and next, so pace yourself.

Macro Moment of Zen

There’s never been a more pressing time for economists to be humble.

Everyone who is a macroeconomist, including myself, has made some very big errors thinking about the economy since the pandemic showed up, Sahm says.

That’s in my Bloomberg profile last week. Much more there, some of which will be in my post on Monday.

If you are curious about the “monster,” I wrote a Substack piece in December:

Jeanna Smialek at the New York Times captures it well

Typically, when the unemployment rate rises by more than 0.5 percentage point like the Fed forecasts it will do next year, the jobless rate keeps rising. Loss of economic momentum feeds on itself, and the nation plunges into a recession. That pattern is so established it has a name: the Sahm Rule, for the economist Claudia Sahm.

Yet Ms. Sahm herself said that if the axiom were to break down, this wacky economic moment would be the time. Consumers are sitting on unusual savings piles that could help sustain middle-class spending even through some job losses, preventing a downward spiral.

“The thing that has never happened would have to happen,” she said. “But hey, things that have never happened have been happening left and right.”

In closing

We have a long way to go to the finish line. Some encouraging news of late. Please keep it coming, and for now, wishing you a restful weekend.