Fiscal policy is largely driven by political impetus and not data. Monetary policy is data driven, but sometimes the models are flawed, sometimes the response function is two tuned to be backwards looking, etc. In addition to that, monetary policy mainly has blunt tools to work with. Tweaking interest rates can't always head off a recession. I'd even argue that the effects are overstated.

One of the more relevant debates going around now is the "hyper-financialized economy" thesis, which posits that things like market downturns can directly lead to real economic downturns, because the corporate decision to do things like shed expenses and jobs is so closely tied to financial metrics like quarterly profits. In short, the tail wags the dog.

These days it's an especially complex situation though, with tariffs and all, and there are some pretty major decisions coming down the line, like big potential insurance costs spikes, etc, that directly influences the real economy. I would hazard to guess that even with well thought out economic policy, some of the changes that the world is going through is bound to have some unintended effects... and many would argue that we are certainly not seeing "well thought out policy" in the first place.

Well, sensible economic policy does. The government should vary it's policies to counter external impacts like covid and oil prices doing odd things.

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I dread the next iteration of hypewave zero.