Recession fears ease thanks to promising economic data, in a boost for “soft landing” hopes

Recession obsession... For years we’ve been warned about an impending economic plunge. Soaring interest rates were expected to throw a big ol’ recessionary wrench into the US economy. CEOs were pointing to ominous “macroeconomic trends.” And finance reporters never failed to mention “recession jitters.” As recently as December, 75% of economists expected the US would enter a recession. Now strong data has boosted optimism for a soft landing (aka: cooling inflation without sparking a recession). 

• Outlook = sunnier. Economists have dialed back recession expectations. Most still expect a contraction, but a smaller one than previously feared. 

• Inflation = easing. The pace of inflation has slowed for 12 months straight, falling to 3%. Sticky “core inflation” — which excludes volatile food and energy, but includes housing and rent — appears to be finally budging down. 

• Jobs = hot. The unemployment rate of 3.6% is near a 50-year low. Hospitality has led the hiring surge, and mass layoffs in tech have been cushioned by lots of folks finding new gigs. 

Turn down for what... The long-predicted downturn hasn’t turned down yet. That’s largely thanks to resilient consumer spending, which accounts for about 70% of US GDP. Wages are (finally) outpacing inflation again, and consumers are still consuming, though a bit more conservatively. Some recent highlights: 

• Retail sales rose again last month as Americans looked for ecomm deals. Amazon had a record Prime Day as we “stimulated the economy” by buying Bluetooth headphones. 

• Travel is booming as people prioritize experiences. Delta and United posted record profits on fierce demand for international vacays (Americans splurging on “White Lotus” summers).