Heading into 2023, it felt like economists universally agreed that a U.S. recession was inevitable. Reasonably so, the notion that any country could raise interest rates as aggressively as the U.S. while avoiding economic retaliation was, at best, naïve, at worst, delusional.

The prevailing sentiment was that it was only a matter of time before unemployment, consumer spending, and everything else would cause the economy to face the music that is the Federal Reserve’s historic rate-hike campaign. As much as Fed officials loved to float suggestions of a potential “soft landing,” economists knew better.

By March, things had unraveled even more. In the midst of the regional banking crisis, with the debt ceiling deadline in clear view and Treasury yield curves aflutter (and frequently inverted), even Fed officials had started to accept that a recession would ultimately be the outcome of the central bank’s disinflation effort.

“Given their assessment of the potential economic effects of the recent banking-sector developments, the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years,” the March Fed policy meeting summary said.

A third-quarter recession was the standard timetable that many economists supported.

Yet, by the time July rolled around, the Nasdaq and S&P 500 were well in the green. Unemployment was still at historic lows, and consumer spending was holding on rather resiliently. Clearly, there had been a paradigm shift. The fear was gone. It was as if economists looked out their windows, saw there wasn’t a hurricane (outside of Florida), and proceeded to grab their beach towels and sunscreen.

A Change in Tone

In recent weeks everyone from the Fed to Goldman Sachs has reversed course from their recession predictions. Instead, believing the nigh-fantastical concept that the U.S. economy — or really any economy — could take a relentless barrage of rate-hikes and keep on chugging away without consequence. And in fairness, maybe they’re right.

As one of the primary economic news writers at InvestorPlace, keeping up with narratives makes up much of my job. As I eagerly pour over any and every major economic development ranging from Federal Reserve policy meetings and new home sales data to unemployment and spending reports, it’s almost inherent to the role that I get a pulse on the trending narratives surrounding the world’s largest economy. Diving deeper into the second half of the year, I’m frequently reminded of a line from one of my favorite films, 2015’s The Big Short.

As Michael Burry’s character (played by Christian Bale) was being chewed out by some of his fund’s principal investors for paying millions in monthly premiums on a more than $1 billion bet against mortgage bonds, awaiting the then-preposterous notion of an impending housing market collapse, he defended himself simply yet eloquently: “I may have been early, but I’m not wrong,” he said.

“I May Have Been Early, but I’m Not Wrong”

As a member of the plurality that once felt confident in the idea of an impending recession, I can’t help but empathize with Burry’s stance. By most accounts, a recession was a calculated certainty. As certain as sunsets. As certain as my morning coffee with milk and honey (a far better sweetener than sugar).

Today, however, I feel increasingly estranged from this view. It’s as if the artificial intelligence (AI) wave has all but overshadowed the looming recession indicators that fired through most of 2022 and much of 2023.

Can Nvidia (NASDAQ:NVDA) stop a recession? Probably not. The harsh truth is that the associations people make between stocks and the economy are frequently misleading.

Just because spending and hiring have been superficially propped up by last year’s record corporate profits doesn’t mean there isn’t still a mudslide in waiting.

“Path Matters More Than Prediction” When It Comes to a Recession

It takes time for rate-hikes to properly run their course through the economy. Most estimate between nine months and a year. The Fed raised rates for the 11th time this cycle, just last month, in fact. Even with the first rate hike dating back to March 2022, it’s impossible for the economy to have properly digested all of the Fed’s rate increases.

Credit card debt is at its highest level ever, recently even passing $1 trillion. ADP reported that job numbers were well below estimates this week. Inflation actually increased from last month. With the return of student loan payments just weeks away, the room for things to break down is clearly widening.

To be clear, my point isn’t that there’s definitely a recession coming that everyone needs to freak out about. As Michael A. Gayed, publisher of the Lead-Lag Report and a fixture on X (formerly Twitter), frequently posts, “…path matters more than prediction.” Whether or not the long-projected recession ever grows the thorns many once thought is undeniably unclear. But just because it’s not raining outside right now doesn’t mean you should sell your umbrella.

As Gayed told InvestorPlace earlier this month:

“No amount of intelligence increases the clarity of one’s crystal ball. You have to think about things in terms of conditions, and if everyone’s on the same side of the boat, it’s not guaranteed to tip over, but I sure as hell don’t want to be on that same side.”

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.