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Where’s the imminent recession we were promised a year ago?
Nowhere apparently, but hardly anyone has come forward to admit they were wrong. And that includes Wall Street gurus.
Last June the finance world was abuzz with pledges that the U.S. economy was barely a hare’s whisker away from diving into a recession. Back then, I wrote a column for Time magazine which clearly showed that there were no signs of an imminent recession.
Reams of Positive Data
There are still few signs that the economy will contract in the few weeks ahead. In fact the opposite seems true. Consider the following:
- The latest U.S. government data shows the economy grew 1.5% in the first quarter, down from 2.6% in the three months through December 31.
- Meanwhile, the services sector, which includes banking, advertising, and other important industries, is still expanding. “The S&P Global US Services PMI increased to 55.1 in May 2023,” according to TradingEconomics. Readings above 50 mean the sector is growing, and that’s particularly important as services account for almost four-fifths of the overall economy.
- Unemployment remains historically ultra-low. Inflation hit a recent low of 4.9% in April, down from 9.1% last June, new data show.
- And the unemployment rate hit 3.4% in April, which is lower than the 3.6% we saw last June. In fact, unemployment hasn’t been lower than 3.4% in the entire last decade, Department of Labor data show.
- New claims for unemployment insurance remain relatively low this year, no exceeding 250,000 a week. That’s up a little from last year but still fairly modest by historical standards.
Weakness in Housing and Tech
Sure, there are some indications of weakness in the housing market, largely caused by soaring borrowing costs and lack of available credit from the banks.
The tech sector is also going through some tumult, but its the first major downsizing in two decades. That’s something that periodically needs to happen in an industry that requires an ongoing cycle of innovation, disruption and destruction.
Other than that things seem dandy on the economic front and have done in the 12 months since financial blabbermouths promised us an imminent recession.
So here’s a question:” Why won’t self-styled Wall Street gurus ‘fess up and say thye were wrong. Not partially wrong, but really truly wrong.