Economy is resilient now but shocks from the plan can collapse it.
Romans ’22 [Christine; 12-02-2022; “The ‘yes, but’ economy. Yes, we’re worried about recession — but the economy remains resilient’; CNN Business; CNN’s Chief Business Correspondent; https://www.cnn.com/2022/12/02/economy/yes-but-economy-analysis/index.html \\pairie]
“The labor market is incredibly strong again,” Federal Reserve Chairman Jerome Powell in a speech Wednesday. “It’s too great, in a way, because it’s going to be adding to inflation.”
So what’s next?
The truth is that no one knows what happens next. Forecasts have been notoriously unreliable in the post-Covid economy. (Remember “transitory” inflation?”)
The Fed has been trying to contain the highest inflation since the 1980s, jacking up interest rates six times this year and even rolling out a bumper three-quarter-point hike not once but four times in a row.
That means the next year will no question be a challenge as all that tightening continues to work its way through the economy.
But household finances are in better shape to handle it, with an excess $1.7 trillion in savings as a cushion — although people will likely have to dip into more of their savings.
And while the housing market may be cooling, it’s not crashing. After a very strong 2021, the sector is “readjusting, recalibrating,” Bess Freedman, CEO of Brown Harris Stevens, said on CNN’s “Early Start.”
Covid broke the economy and putting it back together has been hard to measure. Tens of millions of jobs were lost overnight. Schools closed, factories shuttered, more than a million lives lost. More than two years later, we’re still struggling to gauge the strength and durability of the recovery.