There's an old saying that Wall Street economists have predicted eight of the last two recessions. The bears in the economics profession keep getting paid a lot of money misreading the nation's economic weather vanes — whether it was the power and durability of the Reagan expansion in the 1980s, the ferocious bull market of the late 1990s, the after-effects of the 9/11 attacks, or most recently the phenomenal revival of growth in President Donald Trump's first years in office.

Most of Wall Street's top economic gurus thought Trump would crash the stock market and the world economy, and here we are with near 4% growth over the past six months and a prediction for the year of close to 3.5%. That's not a crash. A stopped clock is right twice a day, but the Keynesians on Wall Street are hardly any better than that.
All of this is to say the recent frightening claims by Goldman Sachs chief economist Jan Hatzius and other scribes that the economy is likely to slide into recession or a serious skid next year with growth of 1.6% to 1.8% — half our current pace — should be greeted with a collective yawn.

The Keynesian Mistake

Sure, the economy may slip into a recession by 2020. Who knows? The growth rate is cooling down from its blistering 4% pace of late. But the last people investors or employers should be listening to are the professional pessimists. Most of these forecasters are relying on a purely Keynesian analysis of the economy and are basing their gloom on the idea of the "sugar high" of the tax cuts and government spending hikes wearing off next year.