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- Nobel laureate and economist Robert Shiller said the US has a good chance of entering a recession.
- He told Bloomberg Wednesday that the odds of a recession in the next few years are 50%, which is “much higher than normal.”
- The economist, who predicted in 2005 that the housing bubble would burst, also warned a new one may be forming.
Nobel laureate economist and Yale professor Robert Shiller said there’s a good chance the US economy will enter a recession, partly because growing alarms about one could turn into a self-fulfilling prophecy.
“The fear could lead to the actuality,” he told Bloomberg Wednesday.
In his view, the chances of a recession within the next two years are 50%, which is “much higher than normal.”
Best known for predicting in 2005 that the housing bubble would burst, he later authored the 2019 book, “Narrative Economics: How Stories Go Viral and Drive Major Economic Events” and sees new signs of another housing bubble.
This time, the Fed’s continued rate hikes could potentially lead to a rush of home purchases before borrowing costs get even pricier, Shiller warned.
“The idea that we’re in a housing bubble is not so much talked about yet, but it’s starting to come back,” he said.
In addition, Shiller noted that the US is undergoing “post-traumatic stress disorder” from the pandemic, and that could also drive Americans to fulfill their own recession prophecy.
Ultimately, the economist explained, rising inflation is what people are reminded of constantly, and has the largest impact on their beliefs.
“Inflation affects everyone,” he said. “Every time they go to the store they see inflation and it makes them angry.”
