Trump’s ex-economy boss says a recession is ‘off the table’ for the first half of 2023—and people going back to the office is a big reason why

The steady return of people to the office may have helped spark January’s surprise job boom, according to Gary Cohn, former director of the National Economic Council under the Trump administration.

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

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

Employment surged in the services sector, with employers in leisure and hospitality adding 128,000 jobs alone.

Cohn said the growth in services employment is driven by “people going back to what is the new normal,” including going back to the office. Rates of office occupancy across the U.S. broke 50% in the week of Jan. 25, according to Kastle Systems, which uses security card swipes to track attendance.

“Think about people going back into the office. They need parking attendants. They need people to work in 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 trigger a surge in service hires. “It’s enough days in the week in the office where you need the service sector to come back to work,” Cohn said.

Cohn’s assessment is in line with Wall Street banks who think a U.S. recession will hit in the second half of the year. JPMorgan and Citigroup both forecast a “mild recession” in the second half of the year. Investment bank Goldman Sachs is more bullish, giving a mere 35% chance of a U.S. recession happening at all. The International Monetary Fund last week predicted that the U.S. economy will grow by 1.4% this year.

Cooling inflation

The U.S. is also reporting cooler inflation. The overall U.S. consumer price index fell 0.1% in December from the previous month, while core inflation—which excludes food and energy—rose 0.3%.

That good news is leading some inflation hawks to be more optimistic that the U.S. might achieve its hoped-for “soft landing,” where the U.S. Federal Reserve gets inflation under control without triggering a sharp contraction in economic activity.

Larry Summers, the former Treasury secretary who has been a hawk on inflation over the past two years, said it seems “more possible that we’ll have a soft landing than it did a few months ago,” on a Sunday interview with CNN. Yet the economist still warned that some inflation indicators were “unimaginably high,” and that “it would be a mistake to say we’re out of the woods.”

This story was originally featured on Fortune.com

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