Fears of a recession may diminish as a result of lowering inflation and a robust labour market. Although there is still a constant drumbeat of recession predictions, people are starting to lose hope that one will hit the United States in 2023. There are signs that the economy is growing, and the United States may not experience a severe slump after all.
According to Mark Zandi, chief economist at Moody’s Analytics, “inflation is on its back heels.” Zandi asserts that lowering inflation reduces the likelihood that the Fed would raise interest rates, which “substantially increases the odds that the economy will sail through without a recession in 2023.” Positive indicators include a falling Consumer Price Index (CPI), which through December fell for six straight months and indicated weaker inflation. The employment market is another factor, and it is still robust. From Business Insider, here is more
At the same time, the US labour market has virtually shrugged off the prospect of a recession. Workers continue to leave their jobs at almost record-high rates, yet the unemployment rate is still quite low. In December, the US added 223,000 payrolls, well beyond the 200,000 jobs predicted by the analysts surveyed by Bloomberg. Additionally, the unemployment rate decreased to 3.5%, which was below the projected 3.7%.
According to BI, there was further good news about employment on Thursday as unemployment claims dropped significantly at the end of December. The optimistic view of Mark Zandi is shared by other economists. According to Sinem Buber, head economist at ZipRecruiter, there is a greater “chance of a gentle landing” when CPI data are taken into account alongside “recent labour market indicators,” according to BI. Jerome Powell, the chairman of the Federal Reserve, has said he was unsure about a recession in 2023. However, if positive trends continue, the Fed will be able to preserve its ultimate goal of price stability, preventing a recession.