Why The US Has Not Experienced A Recession In The Past Two Years -- June 7, 2024

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Long, long article: why the recession still isn't here.

Actually, the headline is wrong. The correct headline: why the US did not experience a recession in the last two years despite all the predictions to the contrary.

The lede to a very, very long article:

The recession, predicted by business executives, economists, and investors, refuses to show up.

Steady hiring continues to fuel consumer spending and, in turn, an economic expansion unlike any the U.S. has seen. Employers added 2.75 million jobs over the last 12 months, including 272,000 in May, the Labor Department said Friday.

The unemployment rate has been at or below 4% for 30 months, something that last occurred during the Vietnam War in the late 1960s and the Korean War in the early 1950s. [And there's no evidence that low unemployment, increased wages, fiscal policy, or government debt has had anything to do with current inflation. Inflation was all do to supply chain issues, most secondary to the Covid pandemic.]

Of course, just because everyone who predicted a recession has been wrong doesn’t mean they won’t eventually be right. Though the unemployment rate remains low, it’s risen from its postpandemic extremes: The unemployment rate ticked up to 4.0% last month from 3.9% in April. It was as low as 3.4% in April 2023.

Already, the rate at which companies hire workers has fallen to levels last seen seven years ago. Job vacancies, which soared during the pandemic, have returned to prepandemic levels; if they fall much lower, a higher unemployment rate beckons.

So far, labor market imbalances have resolved themselves without a recession.

If the economy is a mountain climber on a ridge, “there are times when that ridge is extremely broad and even a major event isn’t going to knock the economy off the ridge,” said Glenn Kelman, chief executive of real-estate brokerage Redfin.

Now, “it feels like the ridge has gotten much narrower,” he said.

Two years ago, the Federal Reserve jacked up interest rates at the fastest pace in decades to combat inflation that it initially misdiagnosed as likely to be short-lived. Companies were scrambling for workers, offering large raises and bonuses, and prices were soaring. Investors, economists and some Fed officials thought higher unemployment would probably be needed to bring supply and demand back into balance.

Businesses aren’t shedding workers, though pressures to do so will mount if a longer period of higher rates erodes margins and profits slump.

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Movie Night

The Strange Love of Martha Ivers. 

Link here. 

Casablanca, 1942.

Gilda, 1946.

The Strange Love of Martha Ivers, 1946.