Recent signs of economic resilience have more and more investors giving credence to the "soft landing" narrative, a scenario in which the Federal Reserve successfully tames inflation without causing a recession. This growing conviction in this rather rare outcome helped propel the three major U.S. financial indexes higher in 2023.

Year to date, the blue-chip Dow Jones Industrial Average climbed 13% and set new all-time highs, the broad-based S 500 (SNPINDEX: ^GSPC) increased 23%, and the technology-heavy Nasdaq Composite soared 42%.

Yet, analysts at JPMorgan Chase and Deutsche Bank, among other financial institutions, still see a recession as a distinct possibility in the next 12-18 months. They are concerned that the impact of higher interest rates has yet to fully make its way through the economy, and consumers have propped up the economy so far with outsized spending that is depleting savings and causing many to take on added debt. Some analysts argue that an economic downturn is possible (or even probable) as those situations evolve.

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Source Fool.com