The economists of Goldman Sachs have been declaring that the economy of United States recession proof as the year 2020 dawned however it appears that the recession induced by coronavirus might have just started only some months later. The analysis had not been accounting for the Black Swan event of Coronavirus. The event is a term which is coined for any improbable and unforeseen circumstance. And this instead explores the Great Moderation idea which had been characterized by the sustainable, low volatile growth and the muted levels of inflation.
The changes overall underlying great moderation appear to be intact and we are seeing that the economy is not exactly recession proof as of now as per Goldman Sachs.
They economy had been argued by them that they had been settling gently after the growth of 11 years. While there is a chance that the new risks are going to emerge none of the significant sources of the recessions recently, the inflation, the oil shocks and the imbalances financially seem to be very concerning as of now. As a result of this, the prospects for the softer landing may look a little better than had been thought widely.
All the assessment of risk and the economy modeling in world has been futile if they cannot anticipate the single most important variable particularly if it has the pandemic.
The economist, Burton Malkeil who was also the chief investment officer had also been bullish on the economy of United States as the year had begun. As per the interview, he said that he was not able to see the recession being on the horizon. He has also qualified the remarks by saying that it is very difficult to correctly predict a recession.