Next recession: PIMCO's Nobel-winning forecasting method reveals cause - Business Insider

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$1.9 trillion investment giant PIMCO used a Nobel winner's methodology to envision the next recession — and concluded that its likely trigger is well underway

Thaler advised that PIMCO economists conduct a premortem, which is essentially the opposite of a postmortem. It is intended to rein in the groupthink and overconfidence that comes with adopting a particular viewpoint.

Small- and mid-size firms accessed financing they otherwise would not have qualified for. These companies rode the wave of economic growth that swept the world in a synchronized fashion three years ago. As the chart below from PIMCO shows, private lending activity is closely linked to economic growth. To be sure, the impact of a private-credit crisis on the economy can be offset by the jobs market and consumer spending — both of which are much bigger contributors to growth.

To recap: nonbank lending to riskier companies surged in 2017 when the economy was stronger. But it is now slowing along with the economy.

 

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المملكة العربية السعودية أحدث الأخبار, المملكة العربية السعودية عناوين

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