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Why does good news about the economy sound bad to the Fed?

Many analysts and forecasters anticipate that a recession will land next year. Yet month after month, data piles up showing solid, if slowing, jobs growth, low unemployment and an expanding economy.

“You don’t get recessions in the U.S. economy until consumer spending slows, businesses respond with cost-control measures and that includes some layoffs,” said Stephen Miran, a co-founder of Amberwave and a former Treasury official. And so far, that hasn’t happened. In fact, layoffs remain below pre-covid levels.

So, if economic indicators are strong, why is the conventional wisdom that a recession is likely next year?

It all comes down to inflation and the Federal Reserve’s response to it. The Fed seems like it’s willing to at least countenance a substantial reversal in the labor market — more layoffs, higher unemployment — if not outright trying to cause one. That’s because the Fed’s overwhelming goal is to lower…

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