STANFORD – The year 2023 will be remembered for many significant economic, political, and technological developments. But one of the most noteworthy is something that did not happen: a recession in the United States. While parts of Europe flirted with recession, and China stumbled after lifting its “zero-COVID” restrictions, the US labor market and American consumers proved quite resilient.

That came as no surprise to me. In the summer of 2021, I predicted that President Joe Biden’s so-called American Rescue Plan – an unnecessary $1.9 trillion package of cash payments and subsidies that was three times the estimated output gap over the next two years – would cause a bout of high inflation. In response, the Federal Reserve would have to raise its target interest rate, and the economy would duly slow.

Still, I was not among the majority claiming that a recession was imminent. Instead, I thought there was a good chance of a soft landing (a falling inflation rate in the absence of higher unemployment), because all the recent difficulties in hiring and retaining workers would prompt many firms to hoard labor.

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QOSHE - The Most Important Developments of 2023 - Michael J. Boskin
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The Most Important Developments of 2023

18 1
21.12.2023

STANFORD – The year 2023 will be remembered for many significant economic, political, and technological developments. But one of the most noteworthy is something that did not happen: a recession in the United States. While parts of Europe flirted with recession, and China stumbled after lifting its “zero-COVID” restrictions, the US labor market and American........

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