[Music] Foreign We've been talking about recession fears For over a year now but relief could be On the way some economists are now Saying those financial concerns are Cooling as the U.S job market continues To show resilience for more on this we Have Rick Newman with us he's a senior Columnist at Yahoo finance and the Author of the book rebounders how Winners pivot from setback to success uh Good to see you Hey guys Hey so uh not too long ago we Were talking about a possible recession What's changed We haven't had one that's what's changed In fact we are actually supposed to be a B session right now uh if you go back uh To look at what some of the forecasts Were this time a year ago uh we should Be in a recession and it just keeps not Happening uh so now I mean this Recession forecast just keep getting Pushed out by about nine months so what Economists now seem to be saying is Maybe by the end of the year we will be In a recession and if not then maybe by The beginning of 2024 we will be in a Recession but if the pattern we will Still not be in a recession this time Next year let's hope it's true so you Know for a while there there was a Thinking that you know this might mean
That the FED would maybe stop raising Interest rates but then we had all these Issues with regional Banks and concerns About whether or not you know credit Would would dry up Um so how might this influence the FED Do we have a sense of where they may be Going when it comes to interest rates Yeah I mean there's a lot going on here And it gets kind of circular because one Thing causes another which then causes Another and then it comes back to the First thing and so on but there's a good Chance the FED is done um raising Interest rates uh and the reason is the Fed has been raising interest rates to Slow down economic activity and get Inflation under control and inflation is Falling uh it peaked that nine percent Last June it's now down uh to 4.9 Percent 4.9 percent is still too high But there is a lag in the effect of uh Federal Reserve interest rate hikes call It uh about uh nine months let's say There's a nine month lag so the interest Rate hikes that the FED did has done This year for example still have Probably not flown through into the real Economy and into inflation so there's Reason to think that Um that inflation is going to continue To come down and who knows in a year uh It might be below three percent which Would probably be good enough for the
Fed so uh for ordinary folks who are Watching this uh inflation coming down Recession fears waning the question of Course becomes are businesses changing Their corporate strategies uh for Example you just saw something that I Thought was kind of interesting uh Shareholders for Netflix rejected a CEO And executive compensation right and in Other words you have these companies That are still paying their CEOs uh Millions of dollars but they are laying Off thousands of workers we see that not Just across media but in a bunch of Different spaces including Tech and Retail so with recession fears waning And knowing that businesses are reactive Rick will they at least stem the layoffs Um if not start hiring again So the data is in conflict with itself Because yes there are some large layoffs Hundreds or even thousands of employees At some big companies but when we get Those monthly job numbers those are new Jobs added on net so they those numbers Include all the layoffs and there's Always churn in the economy and they're All there are always companies that are Uh getting rid of workers and reducing Employment but on net I mean economists Can't even believe how strong the labor Market is we had a 310 000 new jobs uh In uh the last month and that was way Above forecasts and I think part of
What's going on here is that the Economic models are kind of broken the The covid messed things up we've had a Huge drop in in the economy followed by A huge boom in the economy in these Economic models that forecast recessions Just are not really working so I mean The bottom line really is as long as you Have a labor market as strong as we have Right now 3.7 unemployment very very low And hundreds of thousands of new jobs Every month you really cannot have a Recession with the labor market that Strong So then you know here's my question to You the economy goes through Cycles we Expect sort of ups and downs Um so are we always kind of at a slight Risk of a recession because if we go up Too high we have to come down Yes Um we are always at a risk of recession And I I love this this indicator that a Lot of economists use they calculate the Risk of a recession and it's not they Don't try to calculate say we're going To have a recession today but they try To forecast uh whether we will have a Recession in let's say six months or 12 Months and even during the best of times The risk of recession is in those models Is like 10 so uh and it is a fact we are Going to have a recession at some point In the future so if you're if you're if
You want to be right just say oh we're Going to have another recession but Don't put a time frame on it it's that Time frame that everybody keeps getting Wrong so we will have another recession You know there's a lot of what's called Excess savings from when people were not Going out during covet and then they Just banked more money there's a lot of That left people are still using that to Buy stuff that is propping up the Economy at some point that that excess Savings is going to be exhausted maybe That will be the thing that tips us into A downturn but Um let's stop trying to talk ourselves Into a recession and just enjoy a pretty Good economy I'm down with that Rick That sounds easy thank you yes yeah I'll Take that advice Rick Newman thank you Very much
