No one will know until we are in it, but I have read that historically the recession starts once the Fed pivots and starts lowering interest rates.
If we make it out of this with a true soft landing, then Powell should go down as one of the best Fed Chairs in history.
Although, with inflation so high it wouldn't shock me to revise the definition of recession to include some inflation component. Because even though GDP is still growing, the average consumer definitely feels like they are in one.
People also say literally the opposite: that raising interest rates is what causes the recession. People even said that the fed was deliberately trying to induce a recession by raising rates. It cannot be both things, that both raising and lowering rates causes recessions.
Heck, isn't lowering rates what the fed does to juice the economy in the face of recession?
but it can be, of course. overstimulation of the economy leads to unsustainable bubbles, which when burst lead to recessions, and an unexpected and unnecessary understimulation can very well cause a recession. (case in point in 2008 the Fed likely overreacted[0], because everyone was so scared of the insane housing prices, claiming there's no economical reason for them, whereas now it's clear that there are multiple serious factors cooperating to keep housing prices absurdly high.)
I guess what I'd ask people who say "the recession is just around the corner, look at datapoint X" to also say what datapoint they'd use to determine that the recession is not just around the corner. Because it feels like the reasoning for why the recession is just around the corner simply fluidly moves between metrics as things change but the "just-around-the-corner-ness" never does.
If we make it out of this with a true soft landing, then Powell should go down as one of the best Fed Chairs in history.
Although, with inflation so high it wouldn't shock me to revise the definition of recession to include some inflation component. Because even though GDP is still growing, the average consumer definitely feels like they are in one.