Good morning.
The much-predicted recession has yet to show its face, with Friday’s employment report showing jobs growing solidly in November and unemployment remaining at a historically low 3.7%. The well-publicized job losses at companies like Amazon, Meta and and Twitter were more than offset by gains at hospitality businesses—particularly restaurants and bars—as people spill back out into the world with a vengeance.
Does that mean recession fears are overwrought? Not really. It probably just means that they are just premature. The Friday numbers showed wage inflation trotting ahead at 5%, which means the Fed’s 4% federal funds interest rate is still too low to curb economic activity. Money remains free. I’m guessing the Fed funds rate will have to get to 6% or higher before it starts to bite, which means the recession gets delayed until late next year, or even early 2024.
