Despite the fact that U.S. consumer sentiment has dropped and business activity seems to be slowing, a “period of sluggish growth looks more likely than an outright recession,” according to a recent article in The New York Times.

“Even as the risk of recession has clearly increased in the last several weeks, there are also sources of resilience that have every chance of proving powerful enough to keep the decade-long expansion going.”

The article outlines the following factors that could lead to a continued expansion despite “trade wars, a slowing global economy and turbulent markets:”

• Strong consumer spending power: “American consumers have been the drivers of the expansion this year, increasing their spending even as businesses display more caution. Because consumer spending accounts for a much larger share of the economy than business investment does, that has propelled overall growth.”
• Resilience to trade wars: “One pattern evident since the trade skirmishes began in earnest in 2018 has been that businesses are able to adapt to moderate tariffs reasonably well. Through some combination of relocating supply chains, raising prices, taking a hit to profit margins, or forcing suppliers to take a hit to profits, they manage to keep the direct economic effect manageable.”
• The Fed: “It’s not just actual interest rate adjustments that matter—it is how markets perceive the future direction of policy that affects how hard or easy it will be for businesses and consumers to get money.”

The article concludes: “There are a lot of risks out there, and it makes sense for C.E.O.s and ordinary consumers to be wary of what the future could hold. But for now, a gloomy economic future remains a far-from-certain possibility.”