The small group of economists who’ve been maintaining that the US can avoid a recession, despite the most aggressive Federal Reserve tightening in decades, is starting to breathe easier.
Many of their peers had expected surging interest rates— up 5 percentage points in just over a year—would’ve put a more material dent in hiring and personal consumption by now. Instead, the unemployment rate is hovering at a more-than-five-decade low, consumers are still spending, and the housing market is beginning to stabilize.
At the same time, inflation has slowed appreciably. That combination is reviving hopes among the true believers, including Fed Chair Jerome Powell, for a “soft landing” scenario in which price pressures dissipate without massive job losses or an economic downturn.
