Growing pains: a recession in recessions

What It Covers

The global economy has avoided recession for fifteen years despite pandemic, war, and banking crises. Economist Callum Williams examines whether this stability creates hidden risks through zombie firms, fiscal deficits, and financial market complacency.

Key Questions Answered

• •Recession frequency decline: Britain experienced recessions 50% of the time from 1300-1800, dropping to 25% in the nineteenth century and becoming rare in the twenty-first century, with no synchronized global recession since 2008 excluding COVID.
• •Zombie firm proliferation: IMF research shows firms that remain highly unprofitable year after year now represent an increasing share of all companies, trapping capital and workers in low-productivity businesses that weaken overall economic efficiency and growth potential.
• •Fiscal deficit risk: The US currently runs a 5% GDP fiscal deficit despite low unemployment and high corporate profits, causing government debt to balloon rapidly and potentially triggering future bondholder reluctance to fund government operations.
• •Financial market complacency: Retail investors now automatically buy stock market dips, believing government intervention guarantees recovery. This behavior only reflects recent policy interventions, not historical market patterns, leaving investors dangerously exposed to genuine corrections.