BusinessMay 13, 2024

Scott Colbert of Commerce Trust said he thought a recession did not appear likely in the near future due to continued rates of low unemployment.

Scott Colbert
Scott Colbert

Scott Colbert, executive vice president, chief economist and director of fixed income management with Commerce Trust, a division of Commerce Bank, said a recession does not appear to be on the horizon.

Colbert made the prediction at the Commerce Bank State of the Economy Lunch on Wednesday, May 8, at the Drury Plaza Hotel Cape Girardeau Conference Center, 3351 Percy Dr. in Cape Girardeau. He served as the event’s keynote speaker.

During his presentation, Colbert said the economy has grown by 30% compared to before the coronavirus pandemic, but two-thirds of that is due to inflation.

While economic growth is slowing down, Colbert said, inflation levels are falling faster.

“I think you’re going to start to see some modest progress on inflation. Will it be enough to let the Fed drop short-term rates near-term? No, but by the end of the year we might see enough progress to begin to dip toward that,” he said.

Ultimately, Colbert said the country has to get wages and salary growth below 4% to get inflation below the Federal Reserve Board’s target of 2%. He said he believed one interest rate cut is coming sometime after the 2024 presidential election.

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“They [the Federal Reserve Board] aren’t going to be able to cut by June or July. The next meeting would be September, just before the election, and I don’t think they’re going to stick their nose in the election,” he said.

The Federal Reserve Board has slowed economic growth to fight inflation six times since 1980, Colbert said. Three times this has led to a soft landing and three times it has led to recession.

Since unemployment is still low, he said this is one indicator there probably won’t be a recession in the near future.

“To create unemployment in this country, you need to fire people, and gosh darn it, we’re not doing our job,” he said. “We’re not firing enough people … you can’t have recession physically in this country without losing jobs.”

There are currently around 165 million jobs in the country, Colbert said. Some 840,000 workers are fired every month, but more than 1 million people are hired, leading to a net gain of some 200,000-plus jobs every month. Practically every industry, he said, is hiring, with a nominal salary growth of 5.5%.

Colbert recommended people extend their certificates of deposit and buy bonds to maximize their economic intake.

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