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“… It’s tearin’ up my heart when I’m with you
But when we are apart, I feel it too
And no matter what I do, I feel the pain
With or without you”

~ NSYNC

Recession fears ease thanks to promising economic data, helping to minimize the heart tearin, in a boost for “soft landing” hopes

Recession obsession… For years we’ve been warned about an impending economic plunge. Soaring interest rates were expected to throw a big ol’ recessionary wrench into the US economy. CEOs were pointing to ominous “macroeconomic trends.” And finance reporters never failed to mention “recession jitters.” As recently as December, 75% of economists expected the US would enter a recession. Now strong data has boosted optimism for a soft landing (aka: cooling inflation without sparking a recession).  Outlook = sunnier. Economists have dialed back recession expectations. Most still expect a contraction, but a smaller one than previously feared.  Inflation = easing. The pace of inflation has slowed for 12 months straight, falling to 3%. Sticky “core inflation” — which excludes volatile food and energy, but includes housing and rent — appears to be finally budging down.  Jobs = hot. The unemployment rate of 3.6% is near a 50-year low. Hospitality has led the hiring surge, and mass layoffs in tech have been cushioned by lots of folks finding new gigs.  Turn down for what… The long-predicted downturn hasn’t turned down yet. That’s largely thanks to resilient consumer spending, which accounts for about 70% of US GDP. Wages are (finally) outpacing inflation again, and consumers are still consuming, though a bit more conservatively. Some recent highlights:  Retail sales rose again last month as Americans looked for ecomm deals. Amazon had a record Prime Day as we “stimulated the economy” by buying Bluetooth headphones.  Travel is booming as people prioritize experiences. Delta and Unitedposted record profits on fierce demand for international vacays (Americans splurging on “White Lotus” summers).

THE TAKEAWAY

Soft hopes are easier to crush… The vibe isn’t so doomy and gloomy anymore (see: recent record stock rallies), but it’s possible we haven’t yet felt the full effects of the Fed’s rate-hiking crusade, meaning recession could just be delayed. And while inflation’s slowing, it could get tougher to hit the Fed’s 2% target. Investors hope for an end to rate hikes after the Fed’s expected bump this week, but many factors could sour optimism.

Meanwhile the stock market is booming and residential sales in the south have ramped up again as inventory is low and appetite has stabilized. The Fed is likely to bump rates once more and the general sentiment is a 1/4 point.