No recession—it should have begun by now but the economy is fine

Ben Casselman and Jeanna Smialek, "Could the Recession in the Distance Be Just a Mirage?," New York Times, 7-19-2023, https://www.nytimes.com/2023/07/19/business/economy/economy-soft-landing.html?name=styln-fed-day®ion=TOP_BANNER&block=storyline_menu_recirc&action=click&pgtype=LegacyCollection&variant=undefined-- 嘉玮

The recession was supposed to have begun by now.

Last year, as policymakers relentlessly raised interest rates to combat the fastest inflation in decades, forecasters began talking as though a recession — economic contraction rather than growth — was a question not of “if” but of “when.” Possibly in 2022. Probably in the first half of 2023. Surely by the end of the year. As recently as December, less than a quarter of economists expected the United States to avoid a recession, a survey found.

But the year is more than half over, and the recession is nowhere to be found. Not, certainly, in the job market, as the unemployment rate, at 3.6 percent, is hovering near a five-decade low. Not in consumer spending, which continues to grow, nor in corporate profits, which remain robust. Not even in the housing market, the industry that is usually most sensitive to rising interest rates, which has shown signs of stabilizing after slumping last year.

At the same time, inflation has slowed significantly, and looks set to keep cooling — offering hope that interest-rate increases are nearing an end. All of which is leading economists, after a year spent being surprised by the resilience of the recovery, to wonder whether a recession is coming at all.

“The chances of a soft landing are higher — there’s no question about that,” said Diane Swonk, chief economist at KPMG US, referring to the possibility of bringing down inflation without causing an economic downturn. “I’m more optimistic than I was six months ago: That’s the good news.”