Returning to office will help avoid US recession: Gary Cohn

Those strong numbers, combined with cooling inflation, mean “a recession is off the table for Q1 and Q2 this year,” Cohn, who is now vice-chairman of IBMCBS’s said Face the Nation on Sunday.

Cohn pointed to January’s “surprising” jobs report as a reason for his optimism. US employers added 517,000 jobs last month, higher than economists expected. Unemployment fell to 3.4%, the lowest rate in the country in 54 years, despite a series of widely publicized layoffs at technology companies such as. Amazon, Alphabet and IBM.

Employment has surged in the service sector, along with entertainment and hospitality employers adding 128,000 jobs alone.

Cohn said the growth in job services is driven by “people getting back to what is the new normal,” including going back to the office. Office occupancy rates across the US fell by 50% in the week of January 25, according to Castle Systemswhich uses security card swipes to track attendance.

“Think about the people coming back to the office. They need parking attendants. They need people to work on the buildings. They need security. They need people to clean the buildings,” he said.

Even employees coming into the office for part of the week is enough to cause a surge in service rentals. “There are enough days in the office week where you need the service sector to get back to work,” Cohn said.

Cohn’s assessment is in line with Wall Street banks that think a US recession will hit in the second half of the year. JPMorganand Citigroup both forecast a “mild recession” in the second half of the year. Investment bank Goldman Sachs stronger, gives and Only 35% chance in a US recession that is happening all over. The International Monetary Fund last week predicted that the US economy grow by 1.4% this year.

Cooling inflation

The US too reporting cooler inflation. The overall US consumer price index fell 0.1% in December from the previous month, while core inflation—which excludes food and energy—increased 0.3%.

That good news is leading some inflation hawks more optimistic that the US can get what he hopes for “soft landing,” where the US Federal Reserve can get inflation under control without triggering a sharp decline in economic activity.

Larry Summers, the former Treasury Secretary who has been an inflation hawk for the past two years, said it seems “more likely that we will have a soft landing than a few months ago,” in a Sunday interview with CNN. Yet the economist still cautioned that some inflation indicators are “unimaginably high,” and that “it would be a mistake to say we are out of the woods.”

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