He noted that a combination of increased supply in the labor force and generally reduced demand as hiring slows should let the labor market find some balance without having widespread layoffs, which is what appears to be happening for the time being. “The labor market is in really good shape, and that’s all in spite of the Fed’s efforts rather than because of it.”īen Casselman at the New York Times recently explored the sort of fork-in-the-road moment the economy is in. “We’ve really shored up our economy in a way that we haven’t done in many, many years, and we’re really reaping the benefits of that,” said Rakeen Mabud, chief economist and managing director of policy and research at progressive think tank the Groundwork Collaborative. However, there are other potential stimuli in the mix, including the Inflation Reduction Act, the CHIPS Act, and the bipartisan infrastructure bill, all put in place under the Biden administration. Most of the government supports put in place during the pandemic, which boosted the economy’s resiliency over the past couple of years, have been sunsetted. Many low-income workers have reaped the benefits of a tight labor market.Ĭonsumer spending has slowed, as have retail sales, but the bottom hasn’t fallen out. People with disabilities and with criminal records have been pulled into the job market. Unemployment claims are ticking up, but they’re still low the economy’s still adding jobs, but not as many as it was. The labor force participation rate is by and large back to where it was pre-pandemic. But in a lot of ways, the current panorama isn’t terrible.Īt 3.5 percent, the unemployment rate is as low as it’s been in decades, and the Black unemployment rate is at its lowest point ever. I don’t think a lot of economists are waking up in the morning and doing a little dance thinking about how awesome the economy is and how it’s going to stay that way forever. “We’re still not on the ground yet, so I don’t think anyone should be throwing a victory parade.” Let’s say the glass is half full here for a minute “A soft landing is going to be tricky to pull off, but I think the initial descent is going well so far,” said Nick Bunker, the economic research director for North America at the Indeed Hiring Lab. But maybe, just maybe, we could see a soft landing. Pretty much nobody (correctly) wants to make any predictions or hard declarations, and the default assumption here really is recession. And the economy’s been so weird lately that, you know, stranger things have happened. The job market has proven quite resilient over the past year, despite the Fed’s best efforts. Sign up here.Ī near-term recession isn’t a guarantee and could be avoided. Twice a month, Emily Stewart’s column exposes the ways we’re all being squeezed under capitalism. “The problem right now is when you look at the data, when you look out at the world, you can see the good scenario of we’re getting back to normal, we’re getting something sustainable, or we’re going to a bad place.” “We’re seeing things slow, they can keep going in terms of slowing more,” said Claudia Sahm, the founder of Sahm Consulting and a former Fed economist. And there are always potential threats lurking - for example, a potential debt ceiling crisis out of Washington, DC. Moreover, Silicon Valley Bank’s collapse in March is another bad card on the table, as it injects more uncertainty into the economy and has led to tighter credit conditions. In fact, Fed economists are projecting a recession this year. The Fed is laser-focused on getting inflation down and has been pretty clear they’re willing to do whatever it takes to accomplish that. “My view is that we are seeing the beginning stages of a recession, but that’s a forecast.” “The real question is are we going to continue to see a soft landing, or are we just seeing the beginning stages of a recession?” said Michael Strain, director of economic policy studies at the American Enterprise Institute, a center-right think tank. Job openings are pulling back, wage growth is decelerating, and hiring is slowing down. The labor market is still adding jobs, but at a slower pace than during much of the post-pandemic recovery. Multiple signals in the economy lately have the landscape looking soft-ish. “The real question is are we going to continue to see a soft landing, or are we just seeing the beginning stages of a recession?”
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