Why the Recession Is Always 6 Months Away

“The economy remains weird,” reports The Wall Street Journal.

March 08, 2023

ALEXANDRIA, Va.— “The next economic downturn has become the most anticipated recession in recent U.S. history. It also keeps getting postponed,” according to The Wall Street Journal.

“It’s the ‘Godot’ recession,” Ray Farris, chief economist at Credit Suisse, told the Journal, which reported that “Mr. Farris found himself among a small minority of economists last fall who predicted the economy would narrowly skirt a downturn this year. Every six months, economists have predicted a recession six months later, he said. ‘By the middle of the year, people will still be expecting a recession in six months’ time.’”

Although the U.S. Federal Reserve is taking steps to slow the economy and curb inflation, policies put in place during the pandemic complicate the effort. Government stimulus measures and slow pandemic-era spending created both savings and pent-up demand.

“Through last June, U.S. households had around $1.7 trillion more in savings accumulated through mid-2021 than if income and spending had grown in line with the prepandemic economy, according to estimates by Fed economists. Even after it is spent, money can still slosh through the economy (one person’s spending is, after all, someone else’s income),” the Journal reports.

Another complicating factor is the robust jobs market, including the surprisingly strong January jobs report.

In January, Bankrate reported that the economy had a 64% chance of entering a recession in 2023, according to the average forecast among economists. “If a much-feared recession does emerge as the year unfolds, this would seem to be the most widely predicted contraction of the economy that I can remember,” Mark Hamrick, Bankrate senior economic analyst, said at the time.