For weeks, Republican and conservative commentators have announced America is in a recessionwarns that this a. be careful Worst case scenario of runaway prices and the economic activity of the catering industry.
But these bearish and deadlocked calls may be little more than driven logic. Several indicators released over the past week and a half show little evidence that the economy is moving in that direction. Here’s the latest evidence of where the economy is headed:
Inflation is going down
We are nowhere near a runaway inflationary spiral. Consumer prices remained stable in July as energy prices fell. Gasoline prices fell 7.7% while heating oil, used to generate electricity, fell 11%.
Sure, the inflation rate in July was 8.5% compared to the same period last year, but it’s still well below the Fed’s target of 2% over 12 months on average. However, there are signs that prices could fall further in the coming months.
American consumers have not only been relieved of inflation, But the growers and farmers liked it. The producer price index fell 0.5% in July, driven by a 16.7% fall in wholesale gasoline prices. Economists had expected an increase of 0.2% in both producer prices and consumer prices.
“While a number certainly does not represent a trend, falling wholesale prices could indicate supply chain constraints are improving,” said Charlie Ripley, senior investment strategist at Allianz Investment Management. “Overall, the data, combined with CPI data from earlier this week, is a welcome sign that we could be near or surpassing peak inflation.”
The job market is strong…
When we’re in a recession, that creates a lot of new jobs – half a million in July. Layoffs are near record lows, while the rate at which people are leaving their jobs is near record highs.
Unlike the 2008 recession, employers are holding on to workers even as manufacturing and construction output slows.
…which helps workers fight inflation
According to the Employment Cost Index, wages and salaries in the private sector increased by 5.7% in the second quarter after rising by 5% in the first quarter. Atlanta’s wage tracker — the most recent wage measurement in the US — showed that wages held steady from June to July and rose 6.7% compared to 12 months ago.
Those who changed jobs received even larger pay increases — an average increase of 8.5% to account for inflation. In fact, labor economist Nick Bunker said wage growth will continue at a fast pace as long as large numbers of Americans are changing jobs.
and late some Concerned that growth could lead to higher consumer prices, others are convinced America is in for a Goldilocks moment. He says a strong job market and weak inflation should help the economy weather a recession.
The post-US economy is in better shape than what first appeared on Quartz.