Expert Economist Tiffany Wilding Discusses the Great Surprise of the US Economy in 2023 and the Risk of a Recession

anticipating an eventual recession might be hiding the fact that it is more likely to come. It is still early to declare victory. The compelling evidence suggests that a soft landing to reduce inflation without a recession is less likely given the lack of a major positive supply shock. While we are seeing productivity improvements and improvement in the labor market participation, we do not seem to have made a huge breakthrough in labor savings or labor productivity. The risks of a slowdown in 2024 remain high due to the diminishing pandemic surpluses that have supported demand and the restrictive monetary policy. Central bankers’ plans to keep rates high for an extended period does not bode well for the possibility of a soft landing. The risks of a recession should not be discounted and the markets may be undervaluing this risk. There is a 50% chance of a recession, which is like flipping a coin, according to Tiffany Wilding, the top expert at Pimco. While she is hopeful for a soft landing, there is evidence to support her view that a recession is a distinct possibility.