For now, even the more pessimistic economists don't expect a downturn anytime soon.
than it's been in years, with hiring strong, layoffs way down and many employers desperate for more workers.Yet several worrisome developments in recent weeks suggest that the risk of recession may be rising. High inflation has proved far more stubborn than many economists had expected. Russia's invasion of Ukraine has exacerbated global food and energy prices. Extreme lockdowns in China over COVID-19 are worsening supply shortages.
— Falling stock prices may discourage affluent households, who collectively hold the bulk of America's stock wealth, from spending as much on vacation travel, home renovations or new appliances. Broad stock indexes have tumbled for five straight weeks. Falling share prices also tend to diminish the ability of corporations to expand.
The clearest sign that a recession might be nearing, economists say, would be a steady rise in job losses and a surge in unemployment. As a rule of thumb, an increase in the unemployment rate of three-tenths of a percentage point, on average over the previous three months, has meant a recession will eventually follow.
At his news conference last week, Powell said the Fed's goal was to raise rates to cool borrowing and spending so that companies would reduce their huge number of job openings. In turn, Powell hopes, companies won't have to raise pay as much, thereby easing inflation pressures, but without significant job losses or an outright recession.“We have a good chance to have a soft, or soft-ish landing,” Powell said. “But I’ll say I do expect that this will be very challenging.
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