Will there be a recession by 2024? Here’s what economists say.
Is the US heading for a recession?
It depends on who you ask. And the day of the week.
54 percent of economists in companies and industry groups put the odds of a decline in the next 12 months at 50% or less. 44 percent say there is a greater chance than even of a decline, according to a survey conducted on 4-12 April by the Norwegian Association of Business Economies.
It marks a reversal from NABE’s January poll by a similar group which found 54% saw a recession within 12 months as likely.
Their somewhat brighter outlook is likely related to improved sales at their companies, said Ken Simonson, a NABE analyst and chief economist at Associated General Contractors, a trade group for the construction industry.
Forty-six percent of the economists surveyed reported increasing sales in their firms over the past three months, and only 1[ads1]7 percent mentioned declining sales. In January, 38% pointed to increasing sales and 30% said business was declining. The economists probably expect that an increase in the companies’ income signals stronger growth in the economy overall, says Simonson.
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He also says: “Inflation has slowed, employment is still growing.” And bottlenecks in the supply chain that triggered product shortages have improved significantly, he says.
The surveyed businesses are NABE members and include manufacturers and service companies.
Is the economy good now?
The survey was conducted after the Labor Department reported that employers added 236,000 jobs in March, a historically strong total but a noticeable decline from earlier in the year.
However, the survey came after news that both retail sales and industrial production fell in March, developments that led some economists to see a downturn as increasingly likely.
The gloomier outlook was already taking hold after last month’s Silicon Valley Bank crisis saw banks make it harder to get loans for consumers and businesses.
Simonson says he doesn’t think the recent retail sales and production reports would have changed the outlook of the NABE experts.
Are job opportunities increasing or decreasing?
Nevertheless, the survey paints a decidedly mixed picture of the economy.
Just 15% of economists said employment increased at their companies in the past three months, the smallest share since October 2020. And just 15% expect employment to rise in the next three months – the second-lowest share since April 2020 – while 19% expect payrolls to fall.
These numbers are consistent with an economy that may well lose jobs in the coming months, Simonson says, and job losses often correlate with recession.
It is possible that most of the economists still predict a decline, but think it will happen later than expected, beyond the 12-month horizon specified in the survey, he says.
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Why is the Fed raising interest rates?
The murky outlook depicted in the poll reflects a recession that has been predicted since early 2022 but is repeatedly being pushed back. The Federal Reserve has been raising interest rates aggressively over the past year in an effort to weaken the economy enough to limit a pandemic-related rise in inflation, a campaign expected to tip the economy into a tailspin. Although inflation has slowed, it is still too high, and the Fed expects to raise interest rates at least one more time.
But while the economy has slowed, it hasn’t gone south. Employers have been reluctant to lay off workers due to prolonged labor shortages. And consumers have relied on rising wages and savings from Covid-related stimulus checks to cope with both inflation and higher interest rates.
But those COVID savings are dwindling. Households racked up a record $180.3 billion in credit card debt last year, according to WalletHub, and delinquencies are rising sharply.
Joseph LaVorgna, chief economist at SMBC Nikko Securities, believes a recession is still coming; it just takes longer to arrive.
“It feels like a ‘slowcession,'” LaVorgna wrote in a note to clients. “The economy is bending but not breaking yet.”