There is growing chatter about a US recession. Talking heads have popped up all over the media asserting confidently that the American economy is doomed to contract because its central bank is tightening monetary policy aggressively at a time when the surge in inflation, escalating energy costs and the horrors of the Ukraine war are undermining confidence.
Note that a recession is not just a couple of quarters of falls in GDP as some commentators say but something deeper — a downturn in incomes, employment, industrial production and services output that is prolonged and spread widely across much of the economy.
Our view is that, first, a downturn of such a nature is not pre-ordained for the US. The headwinds that the pessimists point to are real and will certainly slow the economy — but there is no persuasive evidence yet that this slowdown will turn into an outright recession.