Warnings of a deep U.S. recession have been going on for so long that it’s hard to remember when they weren’t a part of the conversation. But while the economy briefly flirted with a recession in 2022, it has so far avoided a major downturn, and recent trends have been positive.

                By                    Vance Cariaga

Learn: Is It Good To Own Real Estate in a Recession?Discover: With a Recession Looming, Take These 3 Retirement Moves To Stay On Track

If a recession does happen, at least one economist suggests it could be due to negative sentiment as much as economic fundamentals. In a new report, Moody’s Chief Economist Mark Zandi wrote that “given how deep this recession pessimism runs there is reason to worry that it could be self-fulfilling.”

In the report, Zandi noted that recessions are “ultimately a loss of faith — a loss of faith by consumers that they will hold on to their jobs, causing them to curtail their spending, and a loss of faith by businesses that they will be able to sell what they produce, causing them to lay off workers. A self-reinforcing vicious cycle–a recession–takes hold.”

More From Your Money: Choose a high-interest saving, checking, CD, or investing account from our list of top banks to start saving today.

Moody’s has a different take. Instead of a recession, it projects that the U.S. economy could be headed for a “slowcession,” in which economic growth “comes to a near standstill” but “never slips into reverse.”

That doesn’t mean there will be smooth sailing in 2023. Even Zandi concedes that the economy “will struggle in 2023 with halting growth and higher unemployment,” and calls recession “a serious threat.”

At the same time, the economy has been bolstered by a number of positive trends. Prices of oil and gas have fallen sharply since hitting historic highs in the middle of 2022. About a month ago the price of gasoline fell on a year-over-year basis for the first time since January 2021 and remains there today.

Meanwhile, the “inflationary impact of the COVID-19 pandemic is also set to finally fade away,” Zandi wrote, and economic fundamentals remain solid.

“Typically, prior to recessions, the economy is plagued by significant imbalances such as overleveraged households and businesses, speculative asset markets, an undercapitalized financial system that has extended too much credit, overbuilt real estate markets, or financially stretched state and local governments,” Zandi added. “For the most part none of these imbalances exist today.”

The annual inflation rate fell to 7.1% in November 2022 from 7.7% the previous month, The Hill reported. That’s still much higher than normal, but an improving outlook allowed the Federal Reserve to limit its interest rate hike to 0.50 points in December following four straight hikes of 0.75 points.

The employment picture also remains strong, despite recent layoffs in the tech sector.

Find Out: How To Prepare for a Layoff During a RecessionSee: Is a Recession Coming in 2023?

“That said, the near-term economic outlook is a little better than it looked a month ago,” Adams added. “Household finances are taking less of a hit from winter heating costs, with natural gas prices down and milder-than-usual weather across much of the country.”

  • 10 Best Cash Advance Apps That Cover You Until PaydayWhat Happens to Social Security When You Die?The 10 Best Balance Transfer Credit Cards for 2023Experts: 4 Safest Places To Keep Your Savings