It's something echoed in Wednesday's comments from Powell. "To us the economy continues to look quite resilient."Īnd again, the strong job market is a big factor. "Why are we more optimistic?" asked Jan Hatzius, Goldman's chief economist. The labor market has been surprisingly resilient despite the Fed's aggressive rate hikes, with sectors such as contruction holding up much better than expected.īut now, Goldman is sounding even more upbeat, putting the odds of a recession at just one in five. These days, the word that seems to be catching on in Wall Street and corporate suites is one that also starts with an "R": No, not recession, but resilient.Įconomists at Goldman Sachs have been unusually confident among their peers that the Fed would be able to get inflation under control without triggering a recession.ĪFP via Getty Images Construction workers erect a building in downtown Miami, on June 14, 2023. So how are the experts looking at the economy now? economy continues to perform better than many expected." On a conference call with investors this week, Wells Fargo CEO Charles Scharf said what many forecasters are saying: "The U.S. The result is that all three major stock indexes - the Dow Jones Industrial Average, the Nasdaq and the S&P 500 - are in bull markets, having gained 20% or more from their most recent lows. Those developments helped soothe a lot of nerves on Wall Street.Īnd more recently, investors have taken stock of the economy and they have been even more relieved it hasn't turned out quite as bad as they had first feared. Then House Republicans and White House averted what would have been a disastrous debt default. The collapse of SVB sparked a period of intense volatility in markets as investors feared about the health of the smaller lenders.īut regulators stepped in, taking over Silicon Valley Bank and Signature Bank and then helping engineer the sale of a third failed lender, First Republic Bank, to JPMorgan Chase in May. Getty Images A security guard monitors a line of people outside of a Silicon Valley Bank office in Santa Clara, Calif., on March 13, 2023. Investors were rattled in March by the collapse of some mid-sized banks. At the start of 2023, markets were bracing for a tough year, especially with a debt ceiling showdown looming. When the survey was conducted again in early July, 71% of forecasters said a recession is unlikely in the coming year.Īnd you can see this improving outlook clearly on Wall Street. was likely to avoid a recession in the next 12 months. Economic forecasters have become significantly more optimistic.Ī January survey by the National Association for Business Economics found just 42% of forecasters thought the U.S. That seems contrary to what many were expecting? Thanks to that strength, wages are now climbing faster than prices, so workers can actually buy more with their paychecks.Īll of that is pretty encouraging and suggests there might be a wider path to the elusive "soft landing," in which inflation is tamed without a big jump in unemployment. And employers are still adding a couple hundred thousand jobs every month. The unemployment rate is currently 3.6%, close to a 50-year low. What's more, this progress has come with very little pain in the job market, even as the Fed has raised interest rates in the most aggressive fashion since the 1980s. Here's what you need to know about the state of today's economy.įor two years, inflation has been the dark cloud hanging over the economy, but we're beginning to see patches of blue sky.Īnnual inflation in June was just 3% - still above what the Federal Reserve would like, but a big improvement from a year earlier when inflation topped 9%. So what gives? Does this mean recession fears are over? "Given the resilience of the economy recently, they are no longer forecasting a recession," he said. Then there were comments from Federal Reserve Chair Jerome Powell at a press conference on Wednesday, when he said that the outlook of the economists, statisticians, and other experts working at the central bank has gotten rosier. That includes housing and health care, vehicles and gasoline.Īnd, although the latest GDP number is an initial estimate - and may be revised - the trend looks promising. People have continued to spend money, on both goods and services, according to a Bureau of Economic Analysis reading released on Thursday. economy grew at an annual rate of 2.4% - that's a faster pace than Wall Street economists expected. In the second quarter, from April through June, the U.S. Confused about the economy? You're not alone.Īt the start of the year, warnings of a looming recession seemed to be everywhere, like in this NPR story.īut so far, to the surprise of many experts, the economy has proven to be remarkably resilient.
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