Wall Street Today | Powell's Bet Against Recession Looks Good — Minus the Credit Crunch and a DC Standoff

Federal Reserve Chair Jerome Powell reckons the US economy can skirt recession. But the odds are stacked against him — thanks to banking, politics, and even the weather. "It's possible that this time is really different," the Fed chief told reporters.

Still, for Powell's forecast to come true, the US economy will have to overcome three major obstacles: looming credit crunch, debt-ceiling deadlock in Washington and climate wildcard from El Niño, all pointing to a downturn in the second half of this year.

Treasury Secretary Janet Yellen on Sunday said that failure to raise the debt ceiling will cause a "steep economic downturn" in the U.S., and she reiterated her warning that the Treasury Department may run out of measures to pay its debt obligations by June.

April employment held up in the tech, finance, construction and manufacturing industries, the Labor Department said Friday. Both trends supported 253,000 new jobs last month, the best gain since January in a hot labor market that has stood up against high inflation, rising interest rates and banking turmoil. The unemployment rate fell to 3.4% in April, matching the lowest reading since 1969.

Oil opened the week with a gain as investors assessed a complex outlook for global demand after a period of volatile trading. On Thursday the Organization of Petroleum Exporting Countries issues its monthly snapshot and, ahead of that, the US Energy Information Administration delivers its short-term outlook on Tuesday. In addition, the world's largest oil producer, Saudi Aramco, will disclose earnings.

Berkshire Hathaway Q1 operating earnings gained 13% Y/Y as insurance underwriting and investment income surged, the company said Saturday. The company bought back ~$4.4B of its common stock during the quarter, compared with ~$2.6B in the last quarter of 2022.