Despite the recent turmoil in the bank sector, a recession is still not the most likely outcome for the U.S. economy over the next two years, analysts at the Peterson Institute for International Economics said Monday. “The data has been more resilient than we thought it would be,” said Karen Dynan, a professor of the practice of economics at Harvard University, at a briefing for reporters ahead of the formal release of their semi-annual forecast.
In particular, the U.S. labor market has added an average of over 400,000 jobs in the past two months. In addition, demand and spending have also held up. In hindsight, this shouldn’t have been a surprise because of the excess savings built up over the pandemic that still hasn’t been used up. On top of that, there is still pent-up demand for services and autos. But hold the celebrations. We are in for a “slog” for the next two years, Dynan said. The economy should only barely expand, at a 0.6% rate from the fourth quarter of 2022 to the fourth quarter of this year, and then at an only slightly better 1.4% rate over the same period in 2024. All this means there will be “a couple more …