The drumbeat of warnings of an approaching recession continues, but fears of it hitting the US in 2023 are starting to fade. There is evidence that the economy is improving and, after all, the US could avoid a significant recession.
Business Insider quotes Mark Zandi, chief economist at Moody’s Analytics, as saying, “Inflation is on its heels.” According to Zandi, moderating inflation makes the Fed less likely to implement rate hikes, which, according to Zandi, “significantly increases the odds that the economy will sail without a recession in 2023.”
Positive signs include a decline in the consumer price index (CPI), which fell for six consecutive months through December, signaling weakening inflation. Then there’s the job market, which remains strong. Here’s more from Business Insider:
At the same time, the US labor market has considered the possibility of a recession and basically shrugged. Workers are still comfortable leaving their jobs at near-record rates, and the rate of layoffs is still close to an all-time low. The US added 223,000 jobs in December, well above the 200,000 jobs forecast by economists polled by Bloomberg – and the unemployment rate fell to 3.5%, below the forecast of 3.7 %…
The good jobs news continued on Thursday, BI reports, with jobless claims falling sharply in late December.
Other economists agree with Mark Zandi’s positive opinion. BI quotes ZipRecruiter chief economist Sinem Buber who wrote in a statement on Thursday that looking at the CPI data along with “recent labor market indicators” shows a higher “likelihood of a soft landing.”
Federal Reserve head Jerome Powell previously said he was uncertain about a 2023 economic recession. Continued positive developments, however, will allow the Fed to maintain its ultimate goal of price stability, keeping a recession at bay.