Why has the anticipated widespread recession not occurred in history?

In the Federal Reserve’s last press conference of 2023, Federal Reserve Chair Jerome Powell took a bit of a victory lap.

Surprise Consumer Spending

The overall economy of 2023 will be remembered for the strong spending of the American consumer as people opened their wallets more than economists expected. This largely happened because Americans entered the year with more money than many believed, thanks to the influx of trillions of dollars into the economy during the pandemic.

Households and Businesses “Isolated” from Interest Rate Hikes

Economists from Wells Fargo, Deutsche Bank, Bank of America, EY, and Jefferies all recently predicted to Yahoo Finance that interest rate hikes would impact consumers’ wallets faster and more violently than what has actually occurred.

Weak Labor Market That Did Not Happen

The U.S. economy lost more than 9 million jobs in 2020, the largest annual job decline in history, according to the Bureau of Labor Statistics. The biggest losses came in the hospitality and entertainment sectors as Americans largely stayed home to avoid exposure to COVID and many businesses shut down.

A Normal Year Ahead?

Opinions among economists vary on what all this means for 2024. Some do not expect a recession next year, while others like Matthew Luzietti from Deutsche Bank predict a mild recession in 2024 as the delayed effects of the Federal Reserve’s tightening policy push companies to cut jobs and raise the unemployment rate.

Nevertheless, many agree that as 2023 comes to a close, the economy is much closer to pre-pandemic normalcy. The gap between available job openings and employment is at its lowest in over two years. The labor force participation rate has returned to pre-pandemic levels, and the significant wage increases seen during the labor market after the stringent lockdowns are fading.

All of this reflects a return to normalcy, which is a welcome sign for an industry that uses history to help predict what will happen next.

Source: https://www.aol.com/why-most-widely-anticipated-recession-155724086.html