50% of Post-WWII Recessions Caused by Fed's Tightening: Will History Repeat Itself?

Historically, monetary policy errors have been a significant cause of recessions, with 50% of post-WWII downturns linked to the Federal Reserve’s tightening measures to curb inflation. Recently, the Fed has managed a soft landing, with economic growth remaining positive and the yield curve normalizing, though inflation is slightly above the target. Despite this, the economy faces potential threats from executive and fiscal policy errors. While low-probability events like pandemics or natural disasters could trigger a recession, policy missteps such as tariffs, immigration restrictions, and drastic fiscal cuts pose more immediate risks. These policy errors, if significant, could disrupt economic stability, although current developments are not yet severe enough to predict an imminent downturn.

Source: www.calculatedriskblog.com