Coming off its fastest growth spurt in 37 years, the U.S. economy heads into the second half of 2022 caught between sputtering and slamming into reverse. There’s no doubt that conditions are slowing. The question is whether the current period ends up being a necessary downshift to control inflation, or an outright recession that could wreak even more damage. For now, most economists and policymakers are in the former camp. But there’s a growing sense of unease that the latter scenario easily could take hold. “You just don’t have the fault lines in the economy that you typically do before recessions,” said Mark Zandi, chief economist for Moody’s Analytics. “With a little bit of luck, I think we make our way through. But it’s going to be uncomfortable for sure.” Economic pros The optimistic case for the economy largely rests on two pillars: A resilient, cash-flush consumer and a tight jobs market with an unemployment rate just off its lowest level since 1969. Household net worth edged lower in the first quarter due largely to a sharp decline in the stock market . But at $149.3 trillion, net worth is still up 34.8% since the end of 2020, according to Federal Reserve data. The value of individual stock ownership by households has risen 15.8% during that period, while real estate values have soared 20% to $44.1 trillion. As for the jobs market, with 11.4 million job openings , there are 1.9 positions per every available worker in the U.S. workforce, according to the Bureau of Labor Statistics. The unemployment rate is 3.6%, just 0.1 percentage point above its pre-Covid level. Even with a major labor shortage across multiple industries, nonfarm payroll growth has averaged 488,000 through the first five months of 2022. Household debt is on the rise, surging 8.3% in the first quarter. But debt as a share of after-tax income is still running at just 9.5%. That’s lower than the 9.9% at the end of 2019 and way off the Q4 2017 record of 13.2%. Given all that in a vacuum, it seems almost absurd to be talking about recession. “While our models suggest that recession risks are still low, the Fed’s rapid policy tightening will trigger a marked slowdown in economic growth, which means that the risks are likely to build over the coming quarters,” Michael Pearce, senior U.S. economist at Capital Economics, said in a client note. “But suggestions that a recession is imminent or inevitable are well wide of the mark.” In fact, Pearce insists that “recession risks are close to zero over the next 12 months,” in part because bond markets indicate little stress and financial conditions — despite interest rate increases — “are not especially tight from a historical perspective.” Ed Hyman, chairman and head of the economics team at ISI, titled a note Friday, “What Would Make Us Think We’re Already In a Recession?” Hyman rejects recession talk because of a strong labor market, solid company sentiment and, again, a lack of stress in fixed income markets that would point to a downturn. Economic cons In answer to Hyman’s question: Plenty. While the economy is being supported by its most important contributor, the consumer, there is mounting evidence of substantial crevices in that foundation. Hyman’s note came specifically in response to the Atlanta Fed’s GDPNow tool , a running tracker of economic data that gets more accurate as the quarter goes on and additional inputs are gathered. The gauge was revised lower Friday afternoon and now sees GDP in the second quarter falling 2.1%. GDP rose 5.7% in 2021 , the best performance since 1984. Coupled with Q1’s 1.6% decline, that would be a technical recession — not in the second half, not at some far off point in the future, but now. (The Commerce Department will release its official GDP count on July 28.) The Atlanta Fed said its latest downgrade emanated from several reports, capped off with Friday’s ISM Manufacturing survey, showing that consumer spending and private investment are retrenching more than expected. That’s bad news for an economy so dependent on both. The ISM report also showed hiring in the sector contracted and new orders tumbled to their lowest levels since the early days of the pandemic. The main specter is inflation running at 8.6% , the highest level since late-1981. While consumers have handled rising prices, including gasoline at close to $5 a gallon, that simply can’t last forever, particularly as savings levels are falling. “Inflation is weighing on consumer sentiment and restraining consumer spending. Consumers that still have spare spending power are spending it on dining out, vacations, and other services, not more stuff,” said Bill Adams, chief economist for Comerica Bank. “It’s increasingly likely that U.S. real GDP contracted for two consecutive quarters in the first half of 2022. But unless the U.S. starts to see outright job losses, this period looks more like a slump than an outright recession,” he added. The U.S., however, has never in the post-World War II era had two consecutive quarters of declining GDP without a recession. Of course, what’s really keeping economists up at night is how the Fed reacts. The central bank is on a rate-hiking cycle that started well after inflation took hold and is accelerating just as the economy is starting to weaken. Zandi, the Moody’s economist, said that’s the biggest risk now. The central bank’s sudden pivot in June from what had looked like a well-telegraphed 50 basis point (0.5 percentage point) rate hike to a 75 basis point move following elevated inflation data made it look like “they’re ad-libbing,” Zandi said. “It augurs less well for their ability to manage things appropriately.” The view from the Street Zandi considers the likelihood of a recession to be about 40% over the next year and 50% over the next two years. That’s about in line with the rest of Wall Street, which nevertheless has boosted the chances of recession recently. Goldman Sachs recently reduced its Q2 outlook for GDP to a relatively rosy 2.8%, but cut its respective view for the subsequent three quarters to 1.75%, 0.75% and 1%, which would imply full-year growth from Q4 to Q4 of just 0.9%, down from the previous 1.3% forecast. “We now see recession risk as higher and more front-loaded,” chief economist Jan Hatzius wrote, basing his view on a more aggressive Fed. The firm sees recession probability of 30% over the next year and 48% over the next two years. Credit Suisse expects GDP growth of just 0.8% in each of the next two years. “Rapid Fed tightening, rising risk premia, and slower global growth all make a prolonged US slump likely,” economist Jeremy Schwartz wrote. UBS raised its recession probability to 69% based on recent data flows. And Deutsche Bank, which was the first major Wall Street firm to warn of a recession, moved up its timing. “More aggressive hikes have led us to bring forward our timing of the expected US recession slightly to mid-2023,” Deutsche chief economist David Folkerts-Landau wrote. “There is no immaculate disinflation from 8% plus inflation and near-full employment, and thus there will be no soft landing.” –CNBC’s Michael Bloom contributed to this report .