The White House is sure the economy is not in a recession nor headed for one. Wall Street is pretty sure there is no recession now, but isn’t as positive about what’s ahead.

Looking at the data, the picture is indeed nuanced. Nothing right now is screaming recession, though there is plenty of chatter.

The jobs market is still pretty good, manufacturing is weakening but still expanding, and consumers still seem fairly flush with cash, if somewhat less willing to part with it these days.

On Wednesday, the Federal Reserve is likely to announce its second 0.75% point increase in its short-term rate in a row, a hefty increase that it hasn’t otherwise implemented since 1994.

That will put the Fed’s benchmark rate in a range of 2.25% to 2.5%, the highest level since 2018. Fed policymakers are expected to keep hiking until its rate reaches about 3.5%, which would be the highest since 2008.

The Fed’s hikes have torpedoed the housing market, as mortgage rates have doubled in the past year to 5.5%. Sales of existing homes have fallen for five straight months. On Tuesday, the government is expected to report that sales of new homes dropped in June.

Yellen Says Signs of US Recession Aren’t in Sight for Now

Treasury Secretary Janet Yellen expressed confidence in the Federal Reserve’s fight against inflation and said she doesn’t see any sign that the US economy is in a broad recession.

“We’re likely to see some slowing of job creation,” Yellen said on NBC’s “Meet the Press” on Sunday. “I don’t think that that’s a recession. A recession is broad-based weakness in the economy. We’re not seeing that now.”

With US consumer prices rising at the fastest rate in four decades, a growing number of analysts say it will take a recession and higher joblessness to ease price pressures significantly.

The Federal Reserve raised rates in June by the most since 1994 and is expected to approve another 75 basis-point hike this week.

US inflation rate at a 40-year high

Inflation in the United States is at a 40-year high, but the country is not alone. Price increases occur all throughout the world. According to a Deutsche Bank analysis of 111 nations’ inflation rates, the United States is towards the centre of the pack.

The median rate of year-over-year inflation across these nations has more than doubled from 3.0% last year, owing mostly to rising energy and food prices.

In the United States, inflation reached 9.1% in 2022. Many of the factors driving inflation last year, such as supply interruptions from Covid and increased food costs as a result of severe storms and drought, were not unique to the United States.

The cause for soaring inflation was increased demand, which was fueled by the unprecedented $5 trillion (£4.1 trillion) in expenditure authorized by the US government to safeguard households and businesses from the economic catastrophe of the pandemic.

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