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Shocks, Crises, and False Alarms: How to Assess True Macroeconomic Risk Hardcover – July 9, 2024
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An essential new guide to navigating macroeconomic risk.
The shocks and crises of recent years—pandemic, recession, inflation, war—have forced executives and investors to recognize that the macroeconomy is now a risk to be actively managed. Yet unreliable forecasting, pervasive doomsaying, and whipsawing data severely hamper the task of decoding the landscape. Are disruptions transient and ephemeral—or permanent and structural? False alarms are costly traps, but so are true structural changes that go undetected.
How can leaders avoid these macro traps to make better tactical and strategic decisions?
In this perspective-shifting book, BCG Chief Economist Philipp Carlsson-Szlezak and Senior Economist Paul Swartz provide a fresh and accessible way to assess macroeconomic risk. Casting doubt on conventional model-based thinking, they demonstrate a more powerful approach to building sound macroeconomic judgment. Using incisive analysis built upon frameworks, historical context, and structural narratives—what they call "economic eclecticism"—the book empowers readers with the durable skills to assess continuously evolving risks in the real economy, the financial system, and the geopolitical arena.
Moreover, the authors' more nuanced approach reveals that the all-too-common narratives of economic collapse and decline are often false alarms themselves, while the fundamental strengths of our current "era of tightness" become visible.
With rational optimism rather than gloom, Shocks, Crises, and False Alarms speaks to the key financial and macroeconomic controversies that define our times—and provides a compass for navigating the global economy. Rather than relying on blinking dashboards or flashy headlines, leaders can and should judge macroeconomic risks for themselves.
- Print length320 pages
- LanguageEnglish
- PublisherHarvard Business Review Press
- Publication dateJuly 9, 2024
- Dimensions6.5 x 1 x 10 inches
- ISBN-101647825407
- ISBN-13978-1647825409
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Editorial Reviews
Review
"…this is a stimulating primer on how business leaders can keep abreast of changing economic tides." — Publisher's Weekly
"a fresh, thorough and practicable book for anyone who wants to sharpen their macroeconomic judgment, structured in an easily accessible and insightful manner. It offers an invaluable framework to better understand growth, the financial sector and the key trends shaping the global economy." — Financial Times
Advance Praise for Shocks, Crises, and False Alarms:
"A provocative, pragmatic, and didactic take on a topic that is top of mind for corporate leaders around the world. A rich tapestry of insight . . . for anyone seeking a deeper understanding of the intricacies of macroeconomics." — Andre Maciel, Global CFO, Kraft Heinz
"Shocks, Crises, and False Alarms brings great clarity to the macroeconomic realities leaders need to understand . . . This book helped ground my thinking and understanding of global uncertainties." — Miki Tsusaka, President, Microsoft Japan
"The authors refreshingly argue that it is misplaced to believe in silver-bullet models. With this book, everyone can learn to navigate what may come." — Ali Dibadj, CEO, Janus Henderson
"A valuable framework to improve decision-making in an uncertain world. The authors replace the false precision of point forecasts with an analytical focus on the economic drivers that shape risk." — Tom Luddy, former Chief Investment Officer, J.P. Morgan Investment Management
"A tour de force! The authors combine the skills of economist, Wall Street analyst, and historian to bring a unique perspective to the issues that drive economic risk. And an enjoyable read to boot!" — Colin McGranahan, Global Director of Research, Sanford C. Bernstein & Co.
"Timeless, compelling, and thought-provoking, the book also provides a framework for strengthening your own judgment." — Frank Brosens, member of the Board of Directors, Peterson Institute of International Economics; cofounder, Taconic Capital
"A vital guide to thinking about macroeconomic risks." — Brad Setser, Whitney Shepardson Senior Fellow, Council on Foreign Relations
"A compass for navigating macroeconomic risk. . . . A must-read for those seeking a nuanced understanding of macroeconomics." — Hon. Bill Morneau, former Minister of Finance, Canada
"A great book . . . The focus on underlying drivers to form judgments I found to be very impactful." — Thomas Sweet, former CFO, Dell Technologies
About the Author
Philipp Carlsson-Szlezak is BCG’s Global Chief Economist and a managing director and partner in the firm's New York office.
Paul Swartz is Senior Economist and executive director at BCG. He coleads the Center for Macroeconomics at the BCG Henderson Institute in New York.
The authors use their ongoing tactical and strategic research to advise executives and investors on macroeconomic risk, and they frequently publish and comment on the macroeconomy in Harvard Business Review, Fortune, World Economic Forum Agenda, and other business publications.
Product details
- Publisher : Harvard Business Review Press (July 9, 2024)
- Language : English
- Hardcover : 320 pages
- ISBN-10 : 1647825407
- ISBN-13 : 978-1647825409
- Item Weight : 12.8 ounces
- Dimensions : 6.5 x 1 x 10 inches
- Best Sellers Rank: #69,968 in Books (See Top 100 in Books)
- #41 in International Economics (Books)
- #96 in Strategic Business Planning
- #129 in Systems & Planning
- Customer Reviews:
About the authors
Philipp Carlsson-Szlezak is BCG's Global Chief Economist and a Managing Director & Partner in the firm's New York office. He is a regular contributor to Harvard Business Review, World Economic Forum Agenda, and other business publications. You can read Philipp’s latest thinking in his Fortune column. Philipp was previously Chief Economist at Sanford C. Bernstein where he covered the economy and markets for institutional investors across the global asset management industry. Earlier in his career, he worked for the OECD and McKinsey & Company . Philipp studied at LSE and has a Ph.D from Oxford University.
Paul Swartz is a senior economist and executive director at Boston Consulting Group’s Center for Macroeconomics (BCG Henderson Institute). He previously worked at AB Bernstein, where he covered the economy and markets for institutional investors. Earlier in his career, Paul focused on researching and communicating global macroeconomic dynamics for investors and policy makers while working within the Investment Strategy Group at Goldman Sachs, the Center for Geoeconomic Studies at the Council on Foreign Relations, and the research department at Bridgewater Associates. He serves as the vice-chair to the Dean's Advisory Board (College of Art & Sciences) at Syracuse University.
Customer reviews
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They hope you and other readers will benefit across the following dimensions:
1. Develop new analytical skill(s)
2. Negotiate the macroeconomic risk landscape with confidence
3. Think like a rational optimist
4. Hear our views
These four are briefly discussed on Pages 12-13 and throughout the lively narrative.
These are among the passages of greatest interest and value to me, also listed to suggest the nature and extent of Carlsson-Szlezak and Swartz's coverage:
o Good Macro at Risk (Pages 3-15)
o Navigating Shocks, Crises, and False Alarms (4-7)
o How to Assess True Macroeconomic Risk (17-30)
o Letting Go of Master Model Mentality (20-21)
o Emerging Markets: Actionable practices (24-25)
o How Cycles Die: Critical Risk Profile (33-54)
o Why Policy Recessions Still Matter (38-40)
o The Gravity of Growth (57-70, 79-90, and 245-246)
o The Enduring Appeal of Magical Growth Models (67-77)
o When Technology Lifts Growth and When It Doesn't (79-80)
o Remember, Stimulus Is about Willingness and Ability (115-125)
o Why Tactical Stimulus Sputters (127-129
o Inflation (137-148, 150-153, 157-158, and 247-249)
o Remember, Capital Allocation Will Have to Be More Disciplined (167-168)
o The Threat of Debt, Imagined and Real (169-179
o Learning to Love and Live with Bubbles (181-191)
o The Rise of the Convergence Bubble (197-202)
o Trade, Not as Bad as It Sounds (219-229)
o The False Alarms of Dollar Death (233-235)
o Remember, Dollar Obituaries Will Remain Premature (238-239)
Keep in mind that, in Shocks, Cr!ses, and False Alarms, Carlsson-Szlezak and Swartz do not offer a comparative analysis of major economics and their relative potential, nor do they devote separate chapters to key topics such as artificial intelligence (AI), climate change, and the Chinese economy. As indicated previously, their purpose is to help you and countless others to navigate macreconomic risk effectively.
They urge all executives to "embrace a more grounded approach to macro risk...macroeconomics is about [begin italics] judgment [end italics] -- not prediction [because] judgment is the basis of better decision-making (avoiding costly traps), and it can reduce experienced volatility (enabling smoother leadership). Nobody controls economic volatility -- but leaders can choose what they focus on."
I congratulate Philipp Carlsson-Szlezak and Paul Swartz on Shocks, Cr!ses, and False Alarms. It is a brilliant achievement. Bravo!
* * *
Here are two suggestions while you are reading it: First, highlight key passages Also, perhaps in a lined notebook kept near-at- hand, record your comments, questions, action steps (preferably with deadlines), page references, and lessons you have learned as well as your responses to key points posed within the narrative. Also record your responses to specific or major issues or questions addressed, especially at the conclusion of chapters.
These two simple tactics — highlighting and documenting — will facilitate, indeed expedite frequent reviews of key material later.
(Disclosure: I received my copy as a gift from the authors and I'm not being paid or anything to review it. It just deserves to be read if you have an interest in economics and how the world works.)
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