Professor Lazear on CNBC yesterday reiterates and unhedges his thesis that the causes of the 1980 and 1982 recessions are essentially the same as that of the 2007-09 recession.

Fiscal issues will rapidly come to the fore next fall as the federal government faces the looming expiration of the Bush-era tax cuts, the onset of the deficit “trigger,” and another debate on the debt limit. Across the political spectrum, one of the few points on which today’s policymakers can agree is that the tax code is in desperate need of reform.

Investors have been extremely skittish throughout this entire bull market due to the bad taste left in their mouths from the crash during the financial crisis.  This skittishness has caused investors to head for the hills at the slightest hint of a pullback, and we saw this once again over the last week.  With the S&P 500 down more than 4% from its bull market highs, AAII Bullish Sentiment fell from 38.17% down to 28.14% over the past week, or 26.28%. (AAII Bearish Sentiment rose 49.5% as well.)

Speech at the Federal Reserve Bank of San Francisco Business and Community Leaders Luncheon, Los Angeles, California