former top Trump White House economist

The U.S. economy has been remarkably resilient lately, confounding forecasters who have insisted we’re due for a bust after nearly six years of expansion since the body blow from Covid. So when will the wheels finally come off?

There’s no way to know, former top White House economist Tyler Goodspeed said in a new book that will likely confound the legion of professional forecasters who regularly predict impending doom.

“Recessions are fundamentally unforecastable,” Goodspeed said in an interview about the book, “Recession: The Real Reasons Economies Shrink and What to Do About It,” which comes out Tuesday. He was acting chair of the White House Council of Economic Advisers in the first Trump administration.

Goodspeed’s thinking is highly relevant to the war in Iran, but for now he’s asking readers to draw their own conclusions about it. Since leaving government, he has gone to work as chief economist for ExxonMobil. Given the sensitive nature of the conflict, CNBC agreed to not ask Goodspeed directly about the war.

Energy nonetheless features prominently in Goodspeed’s analysis of when and why the U.S. has hit an economic wall over the decades. The transcript of his conversation has been edited for length and clarity.

CNBC: You say recessions are unforecastable. What does that mean? There are a lot of people who try to predict them.

Tyler Goodspeed: In a nutshell, it means recessions are about shocks, and they are shocks we can neither fully anticipate nor effectively hedge against.

We have tools to predict recessions, like the yield curve. But when you actually test these tools on the historical record, there are a lot of false positives and false negatives.

I’ll admit, I still look at the yield curve just to take a look. I’m not a believer in astrology, but I still take a peek at my horoscope now and then.

You’re only human. So, recessions are about shocks. What does a recession-causing shock looks like?

There are many types. One is your sort of big aggregate, macro shocks, like a pandemic, that affect all sectors of the economy roughly evenly and and simultaneously. There’s another category of shock that affects maybe only one or two sectors directly, but those sectors have very high linkages to the rest of the economy.

If you look back over not just the past 80 years, but indeed over the last three and a half centuries, energy is one of those sectors that has…