Thankfully, past periods of economic expansion have tended to be far longer than periods of economic contraction; indeed, the incidence of the latter has been relatively rare. Even so, when recession hits the welfare consequences can be substantial. As output contracts, profits fall and unemployment rises. Policy makers therefore seek to identify warning signs of nascent recession so that measures can be taken to avert or, at least, to mitigate the depth and duration of an incipient downturn. It is also clearly in the interests of corporates to accurately anticipate an imminent downturn. The same is true, of course, of investors who, faced with the prospect of economic contraction, will want to adopt a fundamentally more cautious asset allocation stance.

Lee Iacocca, who ran the US automobile giant Chrysler several decades ago, once observed that what he most wanted from his chief economist was a clear warning when a recession was about to occur. History doesn’t record whether the economist in question rose to the challenge. Generally, however, the US economic forecasting community has not acquitted itself favourably. Indeed, it is well documented that the overwhelming majority of professional forecasters have failed to anticipate each and every recession throughout the post-1945 period. To compound this, these forecasters frequently failed to recognise when a recession was underway. Indeed, The Economist magazine’s brilliant invention of its “recession” word count can boast a demonstrably superior track record. Furthermore, lest you think I am unfairly singling out the US forecasting community, the same chronically dismal recession-forecasting record over past decades holds true of economists elsewhere – whether in the UK, Continental Europe or Japan. As Yogi Berra famously observed: “it’s tough to make predictions, especially about the future”.

Such an unimpressive track record – and one highlighted, of course, by her late Majesty Queen Elizabeth in her disarmingly blunt “why did no one see it coming” question to an assembled coterie of economists in November 2008 – means that it behoves practising economists, whether working in government or the private sector, to seek to raise their recession-forecasting game. And one clear and unambiguous way to do this is to be thoroughly familiar with what has caused past recessions in order to bring that accumulated knowledge of past history to bear in analysing the current conjuncture. In this regard, Tyler Goodspeed’s “Recession: The Real Reasons Economies Shrink and What to Do About it” would seem, at first sight at least, to constitute a felicitous arrival on the macroeconomic scene.

This book focuses primarily upon past US recessions, though those of the UK are also covered. An especially distinguishing feature of Goodspeed’s approach is the sheer amount of historical terrain he seeks to cover in its analysis – in excess of the past three centuries. In this endeavour Goodspeed takes full advantage of the unstintingly diligent work of economists conducted during recent decades to produce reliable data relating to economic activity stretching back that far in time. Incidentally, why Goodspeed chooses to focus exclusively upon the US’s and UK’s past recessionary experience rather than that of other developed economies such as France is never explained. One can only surmise that the lack of data of comparable longevity elsewhere may have played a part.

Another distinguishing feature of his approach is to impart a personal aspect to his “deep dives” into historical episodes by delivering pen portraits of key dramatis personae, notably leading banking figures, such as Lord Overstone, Jay Gould and Andrew Mellon and a clutch of influential economists ranging from Adam Smith to Nouriel Roubini. Such a treatment adds considerable colour to what might otherwise be a far drier narrative. Furthermore, Goodspeed’s highlighting of certain aspects of history are intriguing – I learned about much I didn’t know before such as, for instance, the extraordinary magnitude of the scourge of 18th century piracy or the disastrous agricultural impact of locust plagues in 19th century America. And their inclusion greatly enhances the readability of the narrative.

Goodspeed’s approach to assessing his impressively extensive data set is to analyse, in successive chapters, which of the various theories of recession causation that have been propounded over the years hold water. On this score, Goodspeed writes interestingly and, often, provocatively. Thus, in successive chapters he addresses a wide-ranging clutch of competing hypotheses which have been propounded over time. Interestingly, in the course of so doing, he quite rightly decries the notion that economic expansions die of “old age”; he persuasively debunks the notion that a “liquidationist “policy approach when recession takes hold serves to boost future productivity; he highlights the role of government in intervening to lessen the severity of downturns (with a number of intriguing, pre-20th century examples); he details many past credit disruptions which have laid economic activity low. Furthermore, in a fascinating chapter entitled “Turf, Coal and Oil” he affords much insight into past energy shocks, many of which have been generated by political developments.

What puzzled me about Goodspeed’s analysis, however, is his seeming determination to accord no role whatever to endogenously-generated contractions of economic activity; instead, all his explanations of past downturns comprise the economically deleterious impact of exogenous, or external, shocks. Thus, he gives no consideration to the role of mutually reinforcing asset price and credit bubbles in generating subsequent (private sector) balance-sheet recessions; there is no mention to profit cycles (and the undeniable fact that each and every post-1945 US recession has been preceded by a marked decline in the profit share); and, tellingly, Hyman Minsky – who delivered the critical cyclical insight that “stability breeds instability” – receives not a mention. Similarly, the role of central bank overkill in response to rising inflation pressures is generally ignored. And while he talks of the “murder” of expansions he gives no indication of appreciating that the source of the concept is Rudi Dornbusch who once opined that “The Fed has murdered every post-war recession”.

I must confess also to being puzzled, as far as the analysis of past UK recessions is concerned, by the absence of any reference in either the text or bibliography of Christopher Dow’s magisterial “Major Recessions: Britain and the World, 1920-95”. No contemporary analyst of the UK economy can afford to be ignorant of the contents of this book.

Overall, Goodspeed’s book is worth reading for anybody desiring an accessible introduction to economic downturns on both sides of the Atlantic stretching back over several centuries; its historical sweep is both original and distinctive. I’m sceptical, though, that economic practitioners focused upon the challenge of identifying the principal factors which might generate the next downturn will derive much benefit from this book, given Goodspeed’s wholesale neglect of the endogenously generated factors which have played such distinctive roles in causing the downturns the US and UK have suffered during the past few decades.