The United States avoided a terrible recession with the help of surprisingly strong consumer spending and good luck in avoiding potentially damaging economic effects, such as a prolonged auto workers' strike. But analysts said the risk of a recession next year remains uncomfortably high because these trends cannot last forever.
Americans battered by even higher inflation are eating into their pandemic savings and feeling less confident about the economy. There are also new risks ahead, including a possible shutdown of the federal government this month and a war between Israel and Hamas that could send oil prices soaring if escalated.
The Federal Reserve weighed on economic uncertainty on Wednesday, holding off on another rate hike as expected as it recalibrates its fight to reduce inflation. But Fed Chairman Jerome Powell warned that interest rate hikes, which have been the main driver of recession forecasts, are not necessarily over.
