Today’s jobs report suggests that we’re seeing a sequence of events very similar to the nascent recoveries in 2010 and 2011. The year starts out strong helped by policy easing, then slows in the face of rising commodity prices and policy tightening.
Goldman Sachs’ economics team is out with a note suggesting that the time frame of these economic fluctuations has gotten shorter. Here’s their chart:
Photo: Goldman Sachs
Why the shorter time frame? Goldman’s economists chalk it up to the fact that a deleveraging private sector and debt constrained fiscal sector have created a drag on the economy, which causes overdependence on monetary policy authorities constrained by the zero lower bound.
Additionally, they think that the tighter oil supply means that even incremental increases in demand will result in price increases, so oil prices act as an “automatic stabilizer” on the economy.
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