Many business executives and economists have predicted a recession in 2023, but Moody's Analytics chief economist Mark Zandi sees a "slowcession" instead, according to CNN.
A slowcession occurs when economic growth nearly stops, but doesn't go in reverse, and unemployment increases more slowly, according to the report.
"Under almost any scenario, the economy is set to have a difficult 2023. But inflation is quickly moderating, and the economy's fundamentals are sound. With a bit of luck and some reasonably deft policymaking by the Fed, the economy should avoid an outright downturn," wrote Mr. Zandi.
Moody's expects unemployment to reach 4.2 percent by late 2023, and a recession is still a "serious threat," according to the report. But the job market is still strong, and the Fed could pause rate-hiking as inflation cools.
"It is important not to be Pollyannish, but it [is] also important not to convince ourselves that a recession is inevitable. It's not," wrote Mr. Zandi.
Goldman Sachs also thinks the U.S. economy will avoid a recession in favor of a "soft landing" with continued growth.
"The key macroeconomic question of the year has been whether inflationary overheating can be reversed without a recession. Our analysis suggests that the answer is yes–an extended period of below-potential growth can gradually reverse labor market overheating and bring down wage growth and ultimately inflation, providing a feasible if challenging path to a soft landing," according to the report.