How To Assess True Macroeconomic Risk | Philipp Carlsson-Szlezak

Hidden Forces

Demetri Kofinas

Government, Business

4.8 • 1.6K Ratings

🗓️ 8 July 2024

⏱️ 57 minutes

🔗️ Recording | iTunes | RSS

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Summary

In Episode 370 of Hidden Forces, Demetri Kofinas speaks with Philipp Carlsson-Szlezak, the Global Chief Economist at BCG and the author of “Shocks, Crises, and False Alarms,” about how to assess macroeconomic risk without relying on broken models, pervasive doom-mongering, and whipsawing data prints that have little to do with the structural drivers of economic and financial change.

The shocks and crises of recent years are a rude awakening for executives and investors who have spent the last 40 years operating in a relatively benign macroeconomic and political environment. This period of geopolitical convergence characterized by increased trade and capital flows, lengthening business cycles, declining interest rates, and stable inflation is over, forcing corporate leaders and investors alike to recognize that macroeconomic risk is now something that needs to be actively managed.

In the first hour, Demetri asks Philipp to explain his core framework of economic eclecticism, which relies on contextual flexibility, situational judgment, and rational optimism that neither ignores tail risks nor drags them to the center of the distribution.

They examine four case studies and their associated narratives to help us understand why so many predictions fail to materialize and how a more eclectic approach to macroeconomic risk assessment could have helped investors and business leaders avoid these pitfalls and take advantage of the economic and financial opportunities created by these events in real-time.

In the second hour, Philipp and Demetri discuss the role of government and central bank stimulus as a variable that needs to be actively managed by investors and business executives. They also discuss how to assess the risks associated with a U.S. government debt crisis, the integrity of the U.S. Dollar as a global reserve asset, and how to assess the prospects of technologically induced productivity growth, including AI-driven improvements to a service-oriented economy like the U.S.

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Episode Recorded on 07/01/2024

Transcript

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0:00.0	What's up everybody? My name is Demetra Kaffenas and you're listening to Hidden Forces, a
0:06.0	podcast that inspires investors, entrepreneurs and everyday citizens to challenge
0:12.0	consensus narratives and learn how to think critically
0:15.0	about the systems of power shaping our world.
0:18.4	My guest in this episode of Hidden Forces is Philip Carlson Slezak, the global chief economist at BCG, and the author of a phenomenal
0:26.4	new book on macroeconomic risk titled Shocks, Crisies, and False Alarms, which is out this week.
0:33.5	The shocks and crises of recent years are a rude awakening for executives and investors who have
0:38.9	spent the last 40 years operating in a relatively benign macroeconomic and political environment of geopolitical convergence,
0:46.0	characterized by increased trade and capital flows, a lengthening of the business cycle,
0:51.0	and stable inflation, leading to a steady decline in interest
0:54.6	rates and the levitation of asset prices.
0:57.8	This period is now over, forcing corporate leaders and investors alike to recognize that the macro economy is a risk that needs to be actively managed.
1:07.0	How to do this without relying on imperfect economic models and data prints or by allowing ourselves to be swayed by the pervasive negative
1:14.8	biases of media headlines and the perpetual doom-mongering that is a reward on social media is the subject
1:21.1	of today's conversation.
1:22.1	In the first hour, Philip and I discuss his core framework of economic eclecticism,
1:27.0	which relies on contextual flexibility, situational judgment,
1:31.0	and rational optimism that neither ignores tail risks nor drags them to the
1:35.6	center of the distribution. We examine four case studies and their associated
1:40.4	narratives to help us understand why so many predictions fail to materialize
1:45.2	and how a more eclectic approach to macroeconomic risk assessment could have helped investors
1:49.9	and business leaders avoid these pitfalls and take advantage of the economic and financial
	...

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