Many economists expected the U.S. to suffer a recession last year. Economists surveyed by The Wall Street Journal in late 2022 put the odds of a recession at 63%. The prevailing logic was that the Federal Reserve would raise interest rates too much, causing a substantial decline in spending that would snowball into higher unemployment and an economic downturn.

Instead, the economy remained rock-solid in 2023 despite aggressive rate hikes and elevated inflation. Economic growth actually accelerated last year, supported by strong (albeit slower) increases in consumer spending and business investments. The economy is currently projected to expand at an annualized 2.9% in the first quarter of 2024, above the 10-year average of 2.5%.

In short, recession fears have melted away. Many economists now believe the Federal Reserve will thread the needle and achieve a soft landing, meaning policymakers will tame inflation without triggering a recession. To quote Morgan Stanley analysts, "The U.S. economy is humming along, with nearly all data validating the soft landing."

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Source Fool.com