Every week brings head-scratching contradictory information in regards to the economic system. This previous week was no totally different, with a batch of financial stories exhibiting that — regardless of the recession speak — the US economic system exhibits outstanding resilience.
Yes, the economic system is powerful. However it comes with quite a lot of caveats.
Nonetheless, these are simply elements in a murky soup of conflicting “yes, but” headlines.
Yes, customers say they really feel awful in regards to the economic system. However a report 196 million Individuals went procuring over the Thanksgiving weekend — and people roaring gross sales numbers weren’t simply because inflation has pushed costs larger, but additionally as a result of individuals had been making extra transactions, in accordance with Adobe Analytics.
Curtis Dubay, chief economist on the US Chamber of Commerce calls this “second-hand pessimism” and says the economic system won’t be doing as poorly as you assume.
Yes, inflation at close to 40-year highs is biting into household budgets. However Individuals are reserving air journey and heading to Disney parks in near-record numbers, even with larger park costs.
Yes, economists are apprehensive a few recession, however the job market is extremely tight with greater than 10 million open jobs and 1.7 jobs obtainable for anybody who’s looking for one (or seeking to job hop).
“The labor market is incredibly strong again,” Federal Reserve Chairman Jerome Powell in a speech Wednesday. “It’s too great, in a way, because it’s going to be adding to inflation.”
So what’s subsequent?
The fact is that nobody is aware of what occurs subsequent. Forecasts have been notoriously unreliable within the post-Covid economic system. (Keep in mind “transitory” inflation?”)
The Fed has been attempting to comprise the very best inflation for the reason that Eighties, jacking up rates of interest six instances this yr and even rolling out a bumper three-quarter-point hike not as soon as however 4 instances in a row.
Which means the following yr will no query be a problem as all that tightening continues to work its manner by means of the economic system.
However family funds are in higher form to deal with it, with an extra $1.7 trillion in financial savings as a cushion — though individuals will doubtless should dip into extra of their financial savings.
And whereas the housing market could also be cooling, it’s not crashing. After a really robust 2021, the sector is “readjusting, recalibrating,” Bess Freedman, CEO of Brown Harris Stevens, mentioned on CNN’s “Early Start.”
Covid broke the economic system and placing it again collectively has been laborious to measure. Tens of thousands and thousands of jobs had been misplaced in a single day. Colleges closed, factories shuttered, greater than one million lives misplaced. Greater than two years later, we’re nonetheless struggling to gauge the energy and sturdiness of the restoration.