Why do I not consider this an economic recession? The United States has just released its manufacturing and services PMI data. Although both are below previous values and forecasts, they remain above the 50 threshold, which indicates expansion. This shows that the U.S. economy is indeed cooling down, but it has not entered a collapse zone. It reflects a decline in corporate expansion willingness and weakened demand in the latter half of high interest rates, rather than a cliff-like drop in demand.

From historical experience, during a true recession phase, PMI often quickly falls below 50 and remains there for several months, accompanied by a simultaneous deterioration in orders, employment, and inventory. What we see now is that manufacturing and services are still expanding, just at a slower pace. Companies are more focused on controlling costs, reducing inventory, and cautiously taking orders, which is closer to a soft landing or weak growth, rather than a typical recession.

Moreover, the services PMI remains above 50, indicating that the core pillar of the U.S. economy—consumption and service demand (the core of U.S. GDP)—has not yet experienced a systemic crisis. As long as the services sector does not show significant contraction, employment and household income will not decline sharply, making it difficult to trigger a true economic recession.

This is good news for inflation reduction and provides the Federal Reserve with more space to observe and wait. However, we are still some distance away from needing aggressive easing to counteract a recession.

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