February 3, 2023

The “yes, but” economy. Yes, we’re worried about recession — but the economy remains resilient

2 min read

New York
CNN Business

Every week brings conflicting news about the economy. This past week was no different, with a batch of economic reports showing that – despite talk of a recession – the US economy shows remarkable resilience.

Yes, the economy is strong. But it comes with a lot of caveats.

Let’s review:

However, these contradictory “yes, but” are only ingredients in a ridiculous soup of headlines.

Yes, consumers say they feel weak about the economy. But a record 196 million Americans went shopping over the Thanksgiving weekend — and those roaring sales numbers. Not just because inflation pushed up prices, but also because people were doing more transactions. According to Adobe Analytics.

Curtis Dubai, chief economist at the US Chamber of Commerce, calls it “second-hand despair” and says the economy Might not be doing as bad as you think.

Yes, inflation at a 40-year high is cutting into family budgets. But Americans are booking air travel and visiting Disney parks in near-record numbers. Even with high park prices.

Yes, economists worry about a recession, but the job market is incredibly tight. More than 10 million open jobs And 1.7 jobs are available to anyone who is looking for one (or looking for a job).

Federal Reserve Chairman Jerome Powell said the labor market is incredibly strong once again. In a speech on Wednesday “It’s great in a way, because it’s going to add to inflation.”

So what’s next?

The truth is, no one knows what happens next. Forecasts in the post-Covid economy have been notoriously unreliable. (Remember “temporary” inflation?)

The Fed is trying to tame the worst inflation since the 1980s, jacking up interest rates six times this year and not even once, but four consecutive bumper three-quarter point hikes. Is.

That means next year won’t be a challenge as all that tightness continues to work its way through the economy.

But household finances are in a better position to handle it, with an extra $1.7 trillion in savings as a cushion — even though people will have to dip into more of their savings.

And while the housing market is cooling, it’s not crashing. After a very strong 2021, the sector is “re-adjusting, re-calibrating,” Brown Harris Stevens CEO Bess Friedman said on CNN’s “Early Start.”

Covid broke the economy and putting it back together is difficult to measure. Millions of jobs were lost overnight. Schools closed, factories closed, more than a million lives lost. More than two years later, we are still struggling to gauge the strength and durability of the recovery.

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