A
AcadiFi
Capital Market ExpectationsMedium

A novel respiratory virus causes global lockdowns, shutting down 40% of economic activity for three months. Government transfer payments maintain household income despite mass layoffs. An analyst's CME model, calibrated to 60 years of post-war business cycle data, predicts that consumer spending should collapse proportionally with employment. In reality, spending on goods surges while services spending drops. The model's failure is best attributed to: