After recent performance in the market investors believe that the economy may be headed towards a "soft landing" rather than a recession as previously imagined. The Fed still indicates that there is a 56% chance of recession, but this is down from 66% in August. Another indicator that points towards a recession is that the yield curve is still inverted. Some experts believe a recession is just being delayed. While inflation has dropped significantly it still remains much higher than the Fed hopes. The continuous rise in interest rates this year (leading to the highest level in 22 years) are another indicator experts believe still points towards a recession.
Unemployment rates are current at a historically low rate (3.8%) which is a lead indicator for experts to believe we could be headed towards a soft landing. Experts believe if the market can stay between decreasing inflation and a still growing economy than we have a real chance of the soft landing. Ultimately, we will have to see how the market plays out over the next month and heading into 2024.
Duggan, Wayne. “Recession or Soft Landing: What’s next for the U.S. Economy?” Forbes, October 17, 2023. https://www.forbes.com/advisor/investing/is-a-recession-coming/#:~:text=GDP%20grew%20at%20an%20annual,there’s%20no%20recession%20in%20sight.
It is very comforting to know that the direction of this economy may be better than I previously thought. As a college student I certainly want the economy to be doing well so I can find a job. Now, I know the future is still uncertain, however, good news is good news and I am happy to hear this. I certainly hope that if there is a recession it is not too major, and if the analysts are correct hopefully it will not be too major.
ReplyDeleteJustin, I enjoyed reading your post. It was interesting to evaluate the impact factors such as unemployment and the role it plays in effecting the odds of a recession. I did not previously know that we are currently experiencing historically low rates of unemployment, with this information- it certainly does seem like a soft landing is possible. As we hopefully find ourselves in a peaceful time period after the last few years of unrest, with less changing factors (unemployment, inflation) we can drive the change in the current projection of the economy.
ReplyDeleteWith low unemployment rates, that gives me reassurance that with more people having jobs it will make it easier to keep the economy in a more stable place.
ReplyDeleteIt is very interesting to read about and listen to people explain which country our direction is headed. This article is reassuring that unemployment rates are low, as our economy is still adding jobs. Especially as a college student who will be finding a job, I hope for no large recession as we are entering the work force.
ReplyDeleteWhat are your thoughts on recent news of the fed planning on stopping the hike of interest rates? Does this negate what was previously forecasted?
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