By Ed Lin
The coming recession may be the most widely predicted recession in U.S. history. In the past, forecasters often did not realize we were in a recession until several months after it started. But professional forecasters surveyed in October projected an increase in the unemployment rate of 0.6 percentage point in 2023, to 4.3% from 3.7% this year. That suggests a recession is likely according to a rule promoted by economist Claudia Sahm, who found that increases in the unemployment rate of at least 0.5 percentage point almost always signal recessions.
A rise in unemployment to a level below 5% would be the mildest recession in postwar U.S. history. Can the Fed achieve what is essentially a soft landing? And will it be enough to cool off high inflation?