What Makes This Economic Slowdown Different From the Others?
Past declines have been about unwinding excesses in investment, hiring or construction. This one is about unwinding excessive belief in low interest rates.
It’s not like the office market has been propping up the economy.
Photographer: Andrew Harrer/Bloomberg
We’ve been watching slumps ripple through various parts of the economy over the past 18 months: technology startups and stocks, regional banks and growing concern about commercial real estate. Yet we’re still waiting for the wider labor market to feel the downturn.
Does it even have to? Prior bubbles or periods of economic excess have featured too much hiring and investing like we saw during the late 1990s boom. Or we’ve had excessive credit creation and construction, as we confronted during the mid-2000s. The downturns that followed those periods involved unwinding some of that activity, which led to declines in employment and investment.