The U.S. economy is anticipated to slide into a recession later in the year, said a vast majority of economists questioned in an influential semi-annual poll.
According to the National Association for Business Economics (NABE) Policy Survey, 58% of economists predicted that the economy would enter a recession this year.
The majority of respondents (24%) predicted that the recession would start in the third quarter of this year. The second quarter, which begins at the end of this week as April gets underway, is when 16% of respondents expect the recession to start. Another 13 percent believed the recession will start in the fourth quarter of this year.
Five percent said they thought the economy is actually already in a recession. That’s down dramatically from the 19 percent who voiced the view that the economy was presently in a recession when questioned in the August survey.
Twelve percent predict that a recession will begin in the first half of next year. 22 % said that they don’t expect a recession until the second half of next year or even later.
According to Julia Coronado, CEO of MacroPolicy Perspectives LLC and president of NABE, “More than half of participants in the NABE Policy Survey anticipate a recession at some time in 2023.”
There is considerable consensus that inflation will not drop down to the Federal Reserve’s two percent objective without a recession. 69 percent of respondents indicated that they are “not very confident” or “not sure at all” that the Fed will be able to achieve the target inflation rate in the upcoming two years without triggering a recession. That includes 26% of people who are “not at all confident” and 43% who are “not very confident.”
23 percent of respondents indicated they are “fairly certain” that there won’t be a recession and that inflation will decline. Only 4% and 3%, respectively, of respondents, said they were “confident” or “very confident” in that outcome.
More than seven in ten panelists expect that rise in the consumer price index will stay over 4 percent through the remainder of this year. Over 4% inflation until the end of the year is “very likely,” according to 26% of respondents, and it’s “likely,” according to 45%.
CPI inflation is “unlikely” or “very unlikely” to stay above 4% through the end of 2023, according to 27 of the economists surveyed.
“Panelists typically agree on the forecast for inflation and the ramifications of rate hikes from the Federal Reserve,” noted NABE Policy Survey Chairman Mervin Jebaraj, from the University of Arkansas. More than seven out of ten panelists predict that CPI growth will stay over 4 percent through the end of 2023, and more than two-thirds are skeptical that the Fed will be able to achieve its 2 percent inflation target in that time frame without triggering a recession.
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