The drumbeat of warnings that a recession is approaching continues, but fears that one will hit the United States in 2023 are beginning to fade. There are indications that the economy is improving and that the US can still avoid a major downturn.
Quotes from Business Insiders Mark Zandi, Moody’s Analytics chief economist, who says, “Inflation is hot on its heels.” According to Zandi, moderating inflation makes it less likely for the Fed to hike rates, which Zandi says “significantly increases the likelihood that the economy will be able to navigate recession-free in 2023.”
Positive signs include a declining consumer price index (CPI), which fell six months in a row through December, suggesting a moderation in inflation. Then there is the labor market, which remains strong. Here’s more from Business Insider:
At the same time, the US labor market has looked at the possibility of a recession and essentially shrugged. Workers are still comfortable leaving their jobs at near record rates, and layoffs are still near record lows. The US added 223,000 jobs in December, well above the forecast of 200,000 jobs by economists polled by Bloomberg – and the unemployment rate fell to 3.5%, below the 3.7% forecast…
The good job news continued Thursday, BI reports, with jobless claims plummeting at the end of December.
Other economists agree with Mark Zandi’s positive view. BI quotes ZipRecruiter’s chief economist, Sinem Buber, as writing in a statement Thursday that considering CPI data along with “recent labor market indicators” shows an increased “probability of a soft landing.”
Federal Reserve head Jerome Powell previously expressed uncertainty about an economic downturn in 2023. However, continued positive developments will allow the Fed to maintain its ultimate goal of price stability and keep a recession at bay.