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US may avoid recession in 2023

US may avoid recession in 2023

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The drumbeat of warnings that a recession is coming continues, but fears of one hitting the United States in 2023 are starting to fade. There is evidence that the economy is improving and the US may avoid a a significant decline after all.

Business Insider quotes Moody’s Analytics Chief Economist Mark Zandi, who says, “Inflation is on the back burner.” According to Zandi, the slowdown in inflation makes it less likely that the Fed will implement interest rate hikes, which, according to Zandi, “significantly increases the chances that the economy can make it through 2023 without a recession.”

Positive signs include a declining consumer price index (CPI), which fell for six months in a row through December, signaling a weakening of inflation. Then there’s the job market, which remains strong. Here’s more from Business Insider:

At the same time, the US labor market looked at the possibility of a recession and essentially shrugged. Workers are still comfortable leaving their jobs at near-record rates, and layoff rates are still near record lows. The U.S. added 223,000 payrolls in December, well above the 200,000 jobs forecast by economists polled by Bloomberg — and the jobless rate fell to 3.5%, below the 3.7% forecast…

Good jobs news continued on Thursday, BI reports, p unemployment claims drop sharply at the end of December.

Other economists agree with Mark Zandi’s positive view. BI quotes ZipRecruiterLead economist Sinem Buber, who wrote in a statement Thursday that looking at the CPI data alongside “the latest labor market indicators” showed an increased “likelihood of a soft landing.”

The head of Federal ReserveJerome Powell, previously indicated that he was unsure about an economic downturn in 2023. However, continued positive developments would allow the Fed to maintain its ultimate goal of price stability, keeping the recession at bay.


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