Mr. Irwin noted several reasons why recession fears are no longer making headlines. Trade negotiations with China have moved into another period of de-escalation, and the Federal Reserve cut interest rates twice. Job market and service sector data remain solid, and a sharp drop in longer-term interest rates in August was partly reversed, he said.
Still, “it would be premature to declare a clean bill of health,” he wrote. In the last six months, the manufacturing industry added only 3,000 jobs a month on average, compared to 25,000 a month during the spring of 2018. Other numbers, such as spending on nonresidential construction, fell in August, which could indicate that businesses are slowing investments in warehouses, factories and office buildings, Mr. Irwin said.
“A recession is certainly not a foregone conclusion, and a period of slow growth still looks more likely than an outright contraction,” he wrote. “But just because the recession talk is out of the headlines doesn’t mean all is well.”
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