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Why Mark Zandi says the US economy will narrowly avoid a recession

Inflation is cooling. Consumers are still spending. And hiring is slowing — but not collapsing. That’s why Moody’s Analytics chief economist Mark Zandi is increasingly confident that the American economy will — narrowly — escape a recession.

“It’s going to be a struggle. It’s going to feel uncomfortable. But I think we are going to thread the needle,” Zandi told CNN Business in a phone interview earlier this week.

Zandi, whose forecasts are often cited by the White House, pointed to recent economic and market indicators that suggest the economy is not falling off a cliff despite widespread fears of a recession.

The data over the last couple of months have been better than I would have thought. None of the financial market indicators suggest we have a recession dead ahead,” Zandi said.

New numbers released on Thursday show inflation, as measured by the Federal Reserve’s favorite metric, eased in October.

That is raising hopes the US central bank can slow the pace of its massive interest rate hikes as soon as this month. The US economy also grew faster in the third quarter than initially estimated, bouncing back from two quarters of contraction.

And in a big positive for inflation-weary consumers,   gas prices have plunged The national average for regular gas is now below where it was when Russia invaded Ukraine and down sharply from the record high in June.

My baseline is still no recession. That has not changed. But I do feel more confident than I did a few months ago,” said Zandi. “Inflation is moderating. Oil prices are stable to down. Employment growth is slowing. Layoffs are normalizing

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