Various indicators such as employment rate, recession and distance
Deteriorating economy – Prospect to maintain boom without slowdown
“No landing, not soft-hard landing”
Mainstream Recession Scenario Still
Analysts say that the “no landing scenario,” in which the US economy will continue to fly high without a recession or slowdown, is gaining momentum. As various indicators, including employment, showed better-than-expected figures, a third possibility was raised that was not a ‘soft landing’ or a ‘hard landing’.
On the 12th (local time), the Wall Street Journal (WSJ) reported that “an economic growth upturn,” which seemed unlikely a few weeks ago, is now being talked about by some economists as a third scenario. “The no-landing scenario is a reality,” said Neil Dutta, an economist at research firm Renaissance Macro.
There is a prospect that the economy will continue to boom, rather than a ‘hard landing’ in which the economy slows down sharply or a ‘soft landing’ in which the economy slows down gradually, because there is no shadow of recession in various indicators in the US. In fact, the increase in employment in the United States last month was 517,000 (excluding agriculture). This is more than 2.7 times the market forecast (188,000). Last month’s unemployment rate also fell below the forecast (3.6%) to 3.4%, the lowest since May 1969 in 54 years.
Other indicators, including consumption, are solid. Mastercard analyzed that U.S. retail sales, excluding cars, rose 8.8 percent last month from a year ago. In January, average weekly hours of operation in the US manufacturing sector increased by 1.2%. As a result, Goldman Sachs recently lowered the probability of the US economy falling into a recession in the next 12 months from 35% to 25%.
However, the WSJ added that many experts are still predicting a recession. As the Fed raised interest rates so quickly, it did not take enough time for the full effect to take effect. In 2006, when interest rates were raised to the current level, it took a year and a half for the rate hike to have an impact on the job market.
Kathy Boschansik, chief U.S. economist at Nationwide, an American insurance company, said, “Corporate profits are getting smaller,” and predicted that the economy will enter a mild recession from the middle of this year as the decline in profits leads to a decrease in employment. Given the recent economic situation, there is also a prospect that the Fed may tighten policy.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.