Page 4 - BusinessWest September 2, 2024

By All Indications
The Economy
Is Slowing, but
Remains Robust
BY GEORGE O’BRIEN
[email protected]
ob Nakosteen calls it a ‘calm slowdown.’
That phrase is synonymous with ‘soft landing,’ and
that’s what he’s projecting for the last quarter and change in 2024 at a time when there are mounting questions about the economy, what’s happening — or not happening — and whether we might actually be hearing and using
the dreaded ‘R’ word either later this year or early next. Nakosteen, the semi-retired professor of Economics at the Isen-
berg School of Management at UMass Amherst (he’s still teaching several courses a semester), said the country isn’t really close to
being in a recession when it comes to the technical definition of the term — two consecutive quarters of negative GDP — but people like to toss out that word whenever things start to slow down. And in many ways, they have.
Indeed, the most recent jobs reports have not been as robust as in previous months; the housing market remains
... not at a standstill, but in a real slump
induced by higher interest rates; the stock mar-
ket took a sharp nosedive at the start of August
(but has recovered nicely); and, while inflation
has trended downward, the cost of food, ener-
gy, and other items remains high enough to look bad at all.” make it a top issue in the presidential election.
All this has led many economists (Nako-
steen is one of them), politicians, and, yes, area business owners to speculate that the Fed has, indeed, waited too long to lower interest rates, and thus, in its efforts to tame inflation by cooling the economy, it has cooled it too much.
That ‘too much’ part is certainly a matter of opinion, said Nako- steen, who told BusinessWest that, while things have slowed some- what since earlier this year, the economy remains robust by many yardsticks.
“The economic numbers don’t look bad at all,” he said. “The
labor market has weakened a little bit, but it’s not weak; it’s just
not as strong as it had been. And most of the other indicators are strong, including GNP. It’s about where it had been, and in some ways, it’s above trendline. The last report was about 2.3% annualized growth; when you put all the pieces together, that’s above trendline. It doesn’t sound all that strong, but 2.3% is not bad in the current environment.”
Matt Sosik, president and CEO of bankESB, was in general agree- ment on those points, noting that, given the sharp rise in interest rates, consumers — and the economy in general — have performed better than might be expected.
“This is not breaking news, but the economy has held up really well in spite of a lot of pressure, especially from a rapidly rising interest-rate environment,” he said, adding quickly that huge federal
“The economic numbers don’t