Despite a series of signs of slowing inflationary pressure recently, the outlook that the U.S. economic recession will be inevitable is still dominant, according to the survey.
In a survey of 71 economists conducted by the Wall Street Journal on the 15th (local time), 61 percent said there is a possibility of an economic recession over the next year. This is not much different from the previous survey (63%) in October 2022.
The WSJ added that it is the highest level except for the 2008 global financial crisis when the actual economic recession occurred and the COVID-19 incident in 2020.
The possibility of a U.S. economic recession exceeded 90% immediately after the outbreak of COVID-19.The price fell to 12% in July 2021, but has since risen steadily due to rising inflation concerns.
However, it is predicted that the intensity or period of the recession will be shallow and short. On average, the respondents predicted that the U.S. gross domestic product (GDP) would grow 0.1% in the first quarter of this year and fall 0.4% in the second quarter before stagnating in the third quarter. However, it is expected to achieve 0.6 percent growth in the fourth quarter. This is higher than the previous survey (0.4%).
Expectations for easing inflationary pressure have also grown. According to the survey, the Consumer Price Index (CPI) compared to the same month last year is expected to fall to 3.1 percent by the end of the year. This is down from the previous survey (3.3%).
This is a mixed outlook with the Federal Reserve’s (Fed) efforts to ease inflation without an economic recession, with three-quarters of the respondents saying the Fed will not achieve a soft landing this year.
“Although inflation indicators have eased recently, solid job markets suggest that the Fed still has a long way to go,” said Brett Ryan, an economist at Deutsche Bank. “The Fed will maintain a tightening track to restore employment and price stability, which will lead to unemployment and economic stagnation.”
Although the Fed stressed that there will be no rate cut this year, about half (50.8%) of experts predicted that the Fed will change its monetary policy within this year. If the percentage of respondents (36.9%) who said they would cut interest rates in the first quarter of next year is added, the majority predicted a policy change within about a year.
The survey was conducted from the 6th to the 10th, and not all 71 subjects responded to the survey, WSJ said.