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If you want to cook up a really good recession you need three things: negative GDP, negative consumer sentiment, and a negative labor market. There are hordes of other indicators that forecast gloomier days ahead, but these three are the bread and butter of monetary mayhem–and together in large doses they make bread and butter itself a luxury.

The U.S. GDP grew at an annualized rate of 2.9% last quarter. That’s positive, and right in the tidy little 2%-3% range that the suits want to see. The spending habits of Mr. & Mrs. America account for 2/3 of every dollar spent in this country.  Our collective propensity to spend, construed by the latest Consumer Sentiment reading, is the highest its been all year. So those two paint a pretty rosy picture. And the labor market?

The Unemployment Rate moved lower today to 3.4%, which is the lowest it’s been since 1969.  Analysts anticipated a bump up the other way to 3.6%. The Labor Force Participation Rate is up to 62.4%, there were 517,000 newly created jobs last month (expectations were for only 185,000), and Wage Growth is up 3.5% year over year (which is a nice, health number and down 70% from the 11.39% during the big inflation scare a year ago. All in all, today’s Jobs Report was a really good one. 

Have I been worried about a recession? Yes. Yes, I have been. Are we totally in the clear? Are we ever in the clear?  I side with comments made by Fed Chair Jerome Powell on Wednesday when he said that it will still take some time for the full results of the measures they have thus far implemented to be felt due to the lagging nature of lugging around a 23 trillion dollar animal with input given by 332 million Americans about the direction and pace of travel. So those aren’t exactly his words, but the animal lugging was implied in his written speech. 

Mr. Powell also said, and I concur “I don’t feel a lot of certainty about where [rates] will be toward the end of the year”.  After the 1/4% bump this week and another coming in March, that will pin the overnight funds rate at 5.0%, which is worlds away from the super cheap 0.25% of a year ago.  In the absence of inflation, recession, debt ceiling explosion, or political pandemonium, I don’t see interest rates coming down anytime soon.  But the probability is that any or all of these simmering ingredients will bubble over at anytime and rates will reverse course yet again.