Nation’s Top Economists Are Short-Term Happy, Long-Term Glum
SAN ANTONIO—The good news: the U.S. is headed for growth this year, not recession. The bad news: there is as yet little prospect growth will be any better than before the pandemic.
That, for now, is the consensus of economists speaking at the annual meeting of the discipline’s largest association. A year earlier, when the American Economic Association met in New Orleans, attendees wrung their hands over their collective failure to spot the rise of inflation before it got out of hand, and assumed it would take higher unemployment and a recession to get it down. This year, they are grappling with an entirely different question: how did they underestimate the prospects for what increasingly looks like a soft landing—tamed inflation without a recession? On Friday, the Labor Department reported payrolls rose solidly in December and unemployment remained close to a half-century low at 3.7%.
Economists polled by Dow Jones Newswires expect the Labor Department to report on Thursday that consumer prices rose 3.3% in December from a year earlier. “In early 2023, the U.S. economy was in a very different place than it is now," said Janice Eberly, an economist at Northwestern University.
Since then, much of the damage left by the pandemic has healed: Immigration and labor-force participation, especially among workers ages 25-54, has rebounded, allowing employers to keep hiring and wage growth to cool. Snarled supply chains have mostly normalized, according to an index maintained by the Federal Reserve Bank of New York. “We didn’t really understand why inflation spiked in the first place.
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