Paul Krugman: Intimations of Recession

Published: August 7, 2006

These are the dog days of summer, but there's a chill in the air. Suddenly — really just in the last few weeks — people have starting talking seriously about a possible recession. And it's not just economists who seem worried. Goldman Sachs recently reported that the confidence of chief executives at major corporations has plunged; a clear majority of C.E.O.'s now say that conditions in the world economy, and the U.S. economy in particular, are worsening rather than improving.

On the face of it, this loss of faith seems strange. Recent growth and jobs numbers have been disappointing, but not disastrous.

But economic numbers don't speak for themselves. They always have to be interpreted as part of a story. And the latest numbers, while not that bad taken out of context, seem inconsistent with the stories optimists were telling about the U.S. economy.