The latest signs suggest a U.S. recession may not, after all, be inevitable, according to the Associated Press. Despite much higher borrowing costs thanks to the Federal Reserve’s aggressive streak of interest rate hikes, consumers keep spending, and employers keep hiring. Gas prices have dropped, and grocery prices have leveled off, giving Americans more spending power.
The economy keeps managing to grow. And so does the belief among some economists that the United States might actually achieve an elusive “soft landing,” in which growth slows but households and businesses spend enough to avoid a full-blown recession.
Analysts point to two trends that may help stave off an economic contraction. Some say the economy is experiencing a “rolling recession,” in which only some industries shrink while the overall economy remains above water.
Others think the U.S. is experiencing what they call a “richcession”; major job cuts, they note, have been concentrated in higher-paying industries like technology and finance, heavy with professional workers who generally have the financial cushions to withstand layoffs. Job cuts in those fields, as a result, are less likely to sink the overall economy.
Still, threats loom. The Fed is all but certain to keep raising rates, at least once more, and to keep them high for months, thereby continuing to impose heavy borrowing costs on consumers and businesses. That’s why some economists caution that a full-blown recession may still occur.
