The American economy is supposed to be in a recession, but it didn't get the memo from New York CNN Business.
The GDP report released on July 28, showing the economy had contracted for a second quarter in a row, led some to believe that the much-feared recession had already arrived.
It makes sense: Every period of back-to- back quarters of negative growth coincided with a recession since 1948.
Since the GDP report came out, the recession-is- already-here argument has been severely undermined. A series of events over the past 10 days suggest that the recession calls are premature.
The economy is cooling off after last year's gangbusters growth. It doesn't appear to be suffering from a downfall that would qualify as a recession.
Mark Zandi, Chief economist at Moody's Analytics, believes that the US economic recovery is intact.
This is not a recession. It's not even in the same universe as a recession, according to Zandi. It is patently wrong to say it is. The economy is not healthy because of this. The economy is not out of the woods because of this. The biggest issue in arguing that a recession has already begun is the fact that hiring went up dramatically in July. The United States added 528,000 jobs last month, returning payrolls to pre-Covid levels.
A recession economy doesn't add half a million jobs in a single month.
Brian Deese, director of the White House National Economic Council, told CNN last week that "I don't think anything in the data about where we are right now in the economy is consistent with what we usually think of as a recession.
The job market is too hot. It is a problem for the months ahead because it allows the Federal ReserveFederal Reserve to raise interest rates without causing widespread damage to the labor market in its bid to slow the economy down.
The risk is that the Fed ends up slamming the brakes so hard that it slows the economy right into a recession.
There is a growing sense that the worst is over on the inflation front.
Inflation pressure is on the rest of the economy as gasoline, diesel and jet fuel prices are falling, easing inflationary pressure on the rest of the economy.
Injuries were lowered in July by the energy cooldown and should do the same in August.
The better-than-expected inflation reports reflect not only lower energy prices but easing stress in supply chains scrambled by Covid - 19.
For many, an actual recession would be more painful than today's environment.
A recession would likely result in the loss of hundreds of thousands but millions of jobs. The families would face foreclosure on their homes if they were unable to make their mortgage payments. Small, medium, and large businesses would go under.
None of those things are happening yet, at least not yet.
Recent economic data suggests that the potential recession may have been delayed, not canceled altogether.
There seems to have gone down the risk of a recession over the next six to nine months, according to Zandi. The risk of one in the next 12 to 18 months has gone up.
He said that the recession odds are still uncomfortably high.