The economy shows no sign of recession but is cooling, and the Federal Reserve is pulling off a feat unprecedented in modern history: eliminating high inflation without causing a U.S. recession.
The economy created 199,000 new jobs in November, according to a Bureau of Labor Statistics release Friday morning. The level of job creation is on par with recent U.S. expansion cycles but cooled significantly from the roaring post-pandemic pace of the last three years, which in 2022 had fueled the highest inflation rate in four decades.
The latest economic figures bolster hopes that the Federal Reserve’s aggressive monetary tightening campaign is over. The central bank hiked interest rates 11 times between March 2022 and July 2023 to curb inflation. But further rate hikes are less likely based on evidence inflation has come under control and economic growth is continuing at a sustainable rate.
Inflation, as measured by the Personal Consumption Expenditure Deflator, an index the Fed refers to in policy pronouncements, has declined from a peak annual rate in June 2022 of 7.1% to 3% in October. Lowering inflation without causing a recession is unprecedented in post-War America, but the Fed is doing exactly that now.
The slowing economy and declining inflation rate buoyed stocks, ticking prices higher for the sixth week in a row. The Standard & Poor’s 500 stock index closed Friday at 4604.37, up +0.41% from Thursday and + 0.21% from a week ago. The index is up +105.79% from the March 23, 2020 bear market low and down -4.01% from its January 3, 2022, all-time high.
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