Recessions: How Severe and How Frequent in the Future?

In the first half of 2007, I interviewed University of Oregon economist Mark Thoma (author of the Economist's View blog) about "The Great Moderation," which is the period of very mild business cycles that the world was in from 1983 through 2007. We did not know at the time of the interview that the Great Moderation was about to be jolted by a terribly severe recession. But the interview holds up very well.

Here are a few prescient points the Mark made back then:

• Some economists view financial innovation as a force toward economic stability. Mark was skeptical back then (as was I).
• Ken Rogoff was warning of the potential for tremendous volatility in the financial markets. Good call, Ken.
• Mark did not see recession on the horizon, but he was clearly worried about the housing sector and the dollar. It's worth noting that many of the loudest bears, such as Nouriel Roubini, expected the collapse of the dollar on foreign exchange markets. That did not happen, but Mark's worry about housing was well-founded.

You can listen to Mark by scrolling down on my Interviews page to the second-to-last entry.