The 2023 Recession

It has reached the point where predictions of a recession next year have handily outweighed those for a “soft landing.” The most recent came from FedEx’s new CEO, Raj Subramaniam, who told TV investment expert Jim Cramer that, as he looked at the odds of a recession: “I think so. But you know, these numbers, they don’t portend very well.”

The debate over the fate of gross domestic product is not over, however. Some experts and chief executives believe that consumer confidence has not been exhausted by inflation, particularly as gasoline prices drop. They also point to an unemployment rate of 3.6%, among the lowest levels in decades. Some central bankers also believe they can maneuver the economy by raising rates to offset inflation, but not by enough to strangle growth. It is hard to imagine that a central banker, whose primary job is to keep the economy on an even keel, would say otherwise.

Among the loudest voices shouting that a recession will be deep and long is former Treasury Secretary and past Harvard president Larry Summers. He continues to press his point, primarily when he is interviewed by Bloomberg journalists, that the Federal Reserve made its decision to raise rates too late. As such, unemployment will need to rise to as high as 7.5% to bring inflation back to earth. While that figure is not as high as it was during the Great Recession, it would still mean a deep and long period of economic difficulty.

Subramaniam runs a company that is a solid economic indicator unto itself. FedEx carries more packages and letters than any organization other than the U.S. Postal System or UPS. As it shuts down distribution and delivery infrastructure, management must see a weak holiday sales level. A tremendous part of the route holiday gifts travel runs through FedEx, which, among other things, carries much of Amazon’s e-commerce business.

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Subramaniam had the opportunity to say there was some light at the end of the tunnel. He did not use that opportunity because he does not see one.

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