Majority of economists expect US economy to fall into recession this year
The U.S. economy is expected to fall into recession later this year, said a majority of economists polled in an influential biannual poll.
Fifty-eight percent of economists said they expected the economy to be in recession to start this year, according to the National Association for Business Economics (NABE) policy survey.
The largest share – 24% – said they expected the recession to start in the third quarter of this year. Sixteen percent said they expected the recession to start in the second quarter, which begins at the end of this week in early April. Another 13% said the recession would start in the fourth quarter of this year.
Five percent said they thought the economy was already in a recession. That’s a significant drop from the 19% who expressed the view that the economy is currently in a recession when asked in the August survey.
Twelve percent expect a recession to start in the first half of next year. Twenty-two percent said they did not expect any recession before the second half of next year or later.
“More than half of NABE Policy Survey panelists expect a recession at some point in 2023,” said NABE Chair Julia Coronado, president and founder of MacroPolicy Perspectives LLC.
It is widely believed that inflation will not come down to the Federal Reserve’s 2% target without a recession. More than two-thirds – 69% – said they were “not very confident” or “not at all confident” that the Fed will be able to bring inflation back to its target over the next two years without causing a of recession. This includes 43% who are “not very confident” and 26% who are “not at all confident”.
Twenty-three percent said they were “somewhat confident” inflation would decline without a recession. Only 4% described themselves as “confident” of this result and 3% as “very confident”.
More than seven in ten panelists believe that the growth of the consumer price index will remain above 4% until the end of the year. Twenty-six percent said inflation above four percent through the end of the year was “very likely” and 45% said it was “likely”.
Twenty-seven of the economists surveyed suggest it is “unlikely” or “very unlikely” that CPI inflation will stay above 4% until the end of 2023.
“Panelists generally agree on the outlook for inflation and the implications of Federal Reserve rate hikes,” added Mervin Jebaraj, chairman of the NABE policy survey at the University of Arkansas. “More than seven in ten panelists think consumer price index (CPI) growth will stay above 4% through the end of 2023, and more than two-thirds aren’t convinced the Fed will able to bring inflation down to its level. objective of 2% in the next two years without inducing a recession.
Despite this, economists have a much better opinion of Fed policy than last year. Fifty-eight percent say they consider current monetary policy to be “about right,” down from 46% in August and 22% a year ago. Twenty-six percent said monetary policy was too accommodative, down from 44% in August and 77% a year ago. Fourteen percent say the policy is too restrictive, up from nine percent in August and none in March 2022.
On the other hand, the share of economists deeming fiscal policy too stimulative has continued to rise. Fifty-three percent said fiscal policy was too stimulative, down from 51% in August and 50% last March. Forty-one percent consider fiscal policy to be about right, up from 44% in the two previous surveys. Five percent said fiscal policy was too tight, down from three percent in August and four percent last March.