The U.S. economy has drifted into the Great Uncertainty, which is defined as a multitude of contradictory data signals, a greater emphasis on state-led industrial policy (with massive amounts of money being pumped into targeted sectors over a relatively short period of time), and the popping up unexpected geopolitical problems. This is further complicated by an overarching and often contentious debate over the energy transition and climate concerns, played out against a backdrop of growing disenchantment with the political status quo and the growing shadow of AI. And conditions are likely to get worse before they get better.

What the “Great Uncertainty” also means is that the American public is pessimistic. According to a USA Today/Suffolk poll released on October 22, 2023, only 17 percent of Americans believe that the country is heading in the right direction; 71 percent thought it is heading in the wrong direction, with the rest undecided. The same poll asked, “How much confidence do you have in the nation’s leaders (White House and Congress) to handle the major challenges the nation faces?” Only 4 percent responded with “a lot of confidence” and 32 percent with “some confidence,” but 34.5 percent said “very little confidence” and 27 percent “no confidence.” Most Americans look to the future, its political institutions, and economic prospects with trepidation.

The Great Uncertainty is also reflected in the ongoing misses in economic forecasts. Many Wall Street mavens and many economist shops have been consistently wrong about interest rates through 2023, repeatedly calling for an end to the rate-rising cycle and a new cycle of rate cuts. The same has been true regarding calls for the next recession; several Wall Street economists and rating agencies called for one in the summer. Now, the call is for Q4 2023 or Q1 2023. The difficulty in getting it right was also evident in Q3 2023’s real GDP, which many thought would be lackluster; instead, the number came in at a rapid clip of 4.9 percent, hardly a sign of an economy heading into a recession. Bearing this in mind, will forecasts of a drastic cooling of the economy in Q4 and recession predictions hold up?

There are good reasons to believe in a more dire forecast. Consider the........

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