Washington, D.C. — Amid growing concerns about inflation and the state of the U.S. economy, the booming labor market and continued job growth indicates that the economy is not in a recession, a new Center for American Progress article explains.
The article finds that the U.S. economy has remained strong, despite the speculation that GDP growth in each of the past two quarters may report negative. Real GDP is only a part of a broader set of indicators of an economic recession; all other signs point to a relatively stable economy. Currently, unemployment is low, job growth is stable, and industrial production has remained strong—all things that are inconsistent with previous recent recessions.
According to the article, the U.S. economy has gained 2.2 million jobs since January. The Biden administration’s economic stimulus and vaccination campaign has made it possible for the United States to recover all private sector jobs lost because of the coronavirus-induced recession—recovering 98 percent of all jobs lost during the pandemic. Equally critical, these plans have helped the United States secure a more equitable recovery, with robust job opportunities for Black and Latino populations. To sustain this strong labor market and prevent mass job losses, it is important for the Federal Reserve to not overreact to high inflation by rapidly raising interest rates.
“There is no doubt that the global economy is undergoing a period of uncertainty with Russia’s war on Ukraine, climate-related disruptions, and an ongoing health pandemic. The biggest risks to the U.S. economy remain global economic headwinds and overaggressive action by the Federal Reserve,” said Rose Khattar, associate director of rapid response and analysis for Economic Policy at CAP and co-author of the report. “Nevertheless, the current state of the U.S. economy—particularly the labor market—is still relatively strong and is inconsistent with all recent recessions.”
Please the column: “The Strong US Labor Market Suggests the Economy Is Not in Recession” by Rose Khattar and Jessica Vela.
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