Two very different theories of the business cycle
Uncertainties about the future development of the US economy run deep.
The first runs as follows.
There is an alternative view, though, with very different implications for the future.
This view starts from the idea that people find it difficult to understand how the economy functions. They follow the lead of opinion-makers who pretend to know the truth.
The excessive optimism is unsustainable and leads to a correction. Doubts about the rosy picture set in. This easily degenerates into pessimism
If the business cycle is driven by waves of optimism and pessimism, it is much less clear that the slowdown of the US economy is a short-term phenomenon to be corrected soon
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