Is a recession about to hit the United States?
Depending on who you speak with. also, the weekday.
54 percent of economists working for businesses and trade associations estimate the likelihood of a downturn within the next 12 months to be 50% or less. According to a National Association of Business Economics study conducted from April 4–12, 44% believe there is a better than even likelihood of a recession.
That represents a shift from NABE’s January survey of a comparable population, which found 54% believing a recession within a year was likely.
According to Ken Simonson, chief economist at Associated General Contractors, a trade association for the construction sector and a NABE analyst, their slightly more optimistic attitude is probably related to increased sales at their businesses.
Only 17% of the economists questioned acknowledged dropping sales during the preceding three months, while 46% reported increased sales at their companies. In January, 38% reported increasing sales and 30% reported declining business. According to Simonson, the economists most likely believe that a rise in company revenue heralds a more robust expansion of the economy as a whole.
He adds, “Employment is still growing, inflation has eased.” Additionally, he claims that the supply chain bottlenecks that caused product shortages have greatly improved.
Manufacturers and service providers are both represented among the NABE members whose businesses were surveyed.
Is the economy currently doing well?
The survey was conducted following the Labour Department’s announcement that businesses created 236,000 new jobs in March, a historically high figure but a significant decrease from the first few months of the year.
However, the survey was released following reports that industrial production and retail sales both fell in March. As a result, some economists now believe that a slump is more likely than not.
After the Silicon Valley Bank crisis last month forced banks to make loans more difficult to obtain for consumers and businesses, that more pessimistic perspective had already started to gain ground.
Are there more or fewer career opportunities?
However, the study presents a distinctly contradictory image of the economy.
The smallest percentage since October 2020, 15% of economists reported that employment at their companies rose during the past three months. Only 15% of people anticipate an increase in employment during the next three months, the second-lowest percentage since April 2020, while 19% anticipate a decrease in payrolls.
According to Simonson, those figures are consistent with an economy that may well lose employment in the upcoming months, and job losses frequently precede recessions.
He speculates that while the majority of economists still predict a downturn, they think it will occur later than anticipated, past the survey’s suggested 12-month time frame.
What is driving the Fed to raise interest rates?
The poll’s hazy forecast reflects a recession that has been foreseen since early 2022 but has kept getting postponed. In an effort to weaken the economy sufficiently to prevent a pandemic-related inflation rise, the Federal Reserve has been aggressively raising interest rates over the past year. This campaign is predicted to cause the economy to begin to decline. Although it has decreased, inflation is still too high, and the Fed anticipates raising rates at least once more.