Source: CNN Business —
In 2021, a bunch of economists and policy makers underestimated the inflation that was taking root around the world. In 2022, as inflation hit 40-year-highs and the Fed ramped up interest rates, many of those commentators went full-on gloomy — predicting a recession was all but inevitable.
But in the (slightly) brighter light of 2023, it looks as if the optimists — those who called inflation “transitory” and believed the Fed could pull off a so-called soft landing — were right all along.
See here: Friday’s jobs report was a barn burner. Economists had forecast about 185,000 positions added in January, and instead it added 517,000.
The unemployment rate, which was expected to tick up slightly, instead fell to 3.4% from 3.5%. It hasn’t been that low since before the moon landing.
The labor market is just not giving up. And that makes it hard, if not impossible, to imagine a recession anytime soon.
“You don’t have a recession when you have 500,000 jobs and the lowest unemployment rate in 50 years,” Treasury Secretary Janet Yellen said Monday on “Good Morning America.”
Yellen isn’t alone.
- “Any concern the economy is in recession or close to a recession should be completely dashed by these numbers,” Moody’s Analytics chief economist Mark Zandi told CNN on Friday.
- “The economy is further away from recession than ever,” wrote Christopher Rupkey, chief economist at Fwdbonds. “This is one of the days where economists don’t pick up the phone because they simply do not know what to say.”
To recap: Inflation is trending down. The labor market is stronger than its been in more than half a century. And economic growth is still positive, albeit slightly less robust in the fourth quarter.
So, what happened?
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