The U.S. economy remains in a late-cycle expansion phase with broad concerns of a recession. The Federal Reserve rate hikes have not had enough time to impact economic growth yet. Companies are laying off workers, however there are still plenty of jobs available. Unemployment is incrementally rising, and consumer spending for the moment is holding up. A significant rise in unemployment is the telltale indicator of every recession. The economy is far off from unemployment levels found in a recession. There is hope that any recession will be a mild and short-lived because unemployment may not reach a level normally associated with a recession.

The U.S. is in the late-cycle expansion phase with high recession risks. The economy is contracting. U.S. economic growth disappointed through the first half of the year, with the average of Q1/Q2 growth contracting by 1.1%. A tight labor market makes it difficult to make a recession call. The contraction has not been deep enough to cause unemployment to rise by a few percentage points. A significant rise in unemployment is the telltale indicator of every recession. There is hope that any recession will be a mild and short lived because unemployment may only rise from today’s extremely low rate of 3.5% to 4.5% rate and not reaching a 6% rate level characteristic of most recessions.

First-quarter growth declined at a 1.6% annualized rate, and an estimate from the Atlanta Fed, GDPNow tracker, project -1.9% GDP growth rate in the second quarter. Two consecutive quarters of negative real growth is a technical recession by one definition. According to the National Bureau of Economic Research (NBER), a recession refers to a significant decline in economic activity, lasting more than a few months, normally visible in real gross domestic product, real income, employment, industrial production, and wholesale-retail sales. The U.S. economy is not there yet but slipping that way.

The U.S economy remains in an expansion. Real gross domestic product (GDP) increased at an annual rate of 6.9% in the fourth quarter of 2021. The GDPNow model estimate for real GDP growth in the first quarter of 2022 is 1.1%. For the remaining quarters GDP is projected to grow on average 3%. Next year, TD Economics forecast U.S. economic growth of 2.2%.

The U.S. economy is going through a transition period this year. I am more in the stagflation camp over the next twelve months and not recession. Stagflation looks like 1.1% economic growth and y-o-y inflation of 8.5%! I see inflation peaking by the summer and dropping by year-end. It is difficult for U.S. economy to fall into recession given consumer strength and strong employment numbers.

US economy grew at 5.6% rate in fourth quarter 2021 and 5.8% for 2021! Supply chain constraints, labor shortages, and Omicron related slowdown effects have modestly slowed down the world’s largest and most resilient economy. Economic growth rate will remain higher than normal but has peaked as fiscal and monetary stimulus is waning this year. Overall, consumer demand, household wealth, low employment, easy credit conditions, provide a backdrop for sustained expansion in 2022. Recession risks are quite low.

US economic growth hit a soft patch in the third quarter due to supply chain constraints, labor shortages, and Delta Variance related slowdown effects. Growth rates will remain higher than normal but have peaked as fiscal and monetary stimulus is waning. Overall, pent-up consumer demand due to supply shortages, supportive fiscal and monetary policy, and favorable credit conditions provide a near-term backdrop for sustained cyclical improvement. There is no sight of a recession ahead.

The global economy continued its strong path to recovery, expanding last quarter at its fastest pace in over 15 years. Vaccination rollouts, the easing of stringency measures, monetary and fiscal stimulus, have contributed it's robust broad recovery.

Global economic growth is accelerating and projected to reach 6.1%, and 7.2% in the United States in 2021. Recovery is being fueled by massive fiscal and monetary policy support. With the vaccination rollout gaining pace unleashing trillions of dollars in economic activity.

The global economy continued to grow at a firm pace at the end of 2020. Rising COVID cases and renewed lockdowns in many parts of world have so far inflicted only limited damage on the global economy.

The pace of the recovery in 2021 will depend not only on the course of COVID, as well as development of vaccines, and therapies, but also public policy.

Fundamentally, conditions show a remarkable improvement thanks to the government’s quick fiscal and monetary response. Without question, I think the worst is behind us, but the recovery path remains bumpy.

The 2019 4th Quarter GDP report shows the economy was holding up well before the Covid-19 pandemic. Economists' projections for the next few quarters vary considerably, but most show only one quarter of negative growth.