That outlook, however, is likely to be tempered by market volatility as falling stocks hurt consumption by reducing household wealth. Business confidence is damaged as volatility rises, the cost of capital increases, and uncertainty over government policies - be it a trade war or an assault on the Fed - forestalls investment.
Julia Coronado, founder of Macropolicy Perspectives in New York, said the stock plunge is likely to lower 2019 growth forecasts and possibly push any further Fed rate hike into the second half of that year.
"The shaken confidence that this market correction reflects is very likely going to affect investment and hiring," she said.
Former Treasury secretary Lawrence Summers signaled more alarm Wednesday, tweeting that the probability of a recession in his view had jumped to 60 per cent from "a bit less than 50 per cent" before December. He offered no explanation for the basis of his estimate.
Other economists, however, were still not convinced the market had crossed into territory that would force the Fed to signal an immediate halt to further rate moves.
"The Fed's threshold for reacting to these types of things is really, really high," said Thomas Simons, a senior economist at Jefferies LLC in New York, because the central bank wants to avoid giving investors the impression it will come to their rescue if shares plunge.
"You really have to go back to 1987 to find a time when the stock market influenced monetary policy significantly."
Moreover, Simons said, technical factors - including sell orders driven by tax considerations and low year-end volume - could be exaggerating the dive in stocks.
"The first couple weeks of January will be telling as to whether this selling in December was technically related or actually fundamentally based," he said.
