In his new book ‘Recession,’ economist Tyler Goodspeed argues that economic downturns are caused by real shocks, not predictable business cycles.

Economists have successfully predicted seven of the last three recessions….”

So goes the humorous, if uncomfortably accurate, adage. Business cycles have been a source of fascination for centuries. Some economists attributed them to sunspots. Others to historical cycles — Kondratiev (45–60 year waves), Juglar (7–11 year waves), and Kitchin (three-to-five year waves). These views belong neither to cranks nor obscure figures; well-known economists from William Stanley Jevons to Joseph Schumpeter championed them. 

Tyler Goodspeed’s Recession: The Real Reasons Economies Shrink and What to Do About It belongs on the shelf of anyone tracking business cycles, financial markets, and economic growth. The book delivers a tour de force through US and UK economic history. Meticulously researched, it is full of data, analysis, and engaging stories about financiers, economists, politicians, and the occasional huckster.

I confess this book has done more to challenge my views of the business cycle than just about anything else I’ve read. Goodspeed argues, in fact, that the term “business cycle” is itself a misnomer. Economies do not operate according to predictable patterns or cycles. “Economic expansions don’t die of old age,” he writes, “they are murdered.”

The central claim of the book is that there are no natural or inevitable reasons why modern developed economies must experience recessions. Goodspeed, who served as acting chairman of the Council of Economic Advisers from June 2020 to January 2021 and is now chief economist at ExxonMobil, argues that there are always real shocks behind downturns — not a buildup of malinvestment, not irrational exuberance, not some self-generated collapse. He invokes Tolstoy’s famous maxim that every happy family is happy in the same way, while every unhappy family is unhappy in its own unique way.

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