Market Observations

Modern Monetarism and the Recession that Hasn’t Happened, Yet

Market Observations White Paper
June 2023

Authors & Contributors

The discussion around a US recession has been top of mind for the last year but how close are we really? 

Economists have predicted an elevated risk of recession for the last year but continue to extend its onset. One potential explanation is the reliance on the traditional monetary base. Conversely, the modern monetary base, which adds reverse repurchase agreements (RRPs) to the traditional notion, may prove a more reliable option when assessing the risk of recession.