In a turn of events, top economists have tamped down their predictions of a recession in the U.S. This time last year, a survey of notable business leaders found the majority of respondents believed it was more likely than not that a recession would occur in 2023. So far, those predictions have not come true.
A year later, the same survey, conducted by the National Association for Business Economics, shows those economists now predict it’s more likely than not that no recession will happen in 2024. Compared to the previous year, fears of a recession are easing among the business elite, with 3 in 4 business moguls saying it’s more likely the U.S. will now avoid a recession post pandemic.
The latest responses starkly contrast last year’s when 58% believed a recession was imminent. Even in April, when the economists were asked again, more than half still said a recession was “likely” by the end of this year.
However, not everyone is sold on the idea that the recession is canceled.
JPMorgan Chase CEO Jamie Dimon issued a recent warning that interest rates may continue to go up next year, potentially leading to a recession. Federal Reserve Chairman Jerome Powell hinted at the possibility of more rate hikes in 2024.
The economists surveyed largely credit the drastic interest rate hikes for preventing a recession this year by slowly cooling the red-hot inflation seen in 2022.
While recession fears easing can be seen as a good thing, the survey’s economists believe the Federal Reserve’s goal of returning to a 2% inflation rate is out of reach in the new year. They believe the trend downwards from its peak of 9.1% will continue, but slowly, and not predicting to hit the target 2% until 2025.
While Americans are further in debt than ever before, that isn’t slowing spending.
Shoppers spent a record amount of money in October, and they broke spending records again on Thanksgiving, Black Friday and Cyber Monday.
However, the caveat is the record amount of spending Americans are doing is largely going on credit cards. Americans have hit a new record with $1 trillion in credit card debt, facing historically high interest rates on their payments.
The top economists surveyed say if a recession or economic downturn does occur in 2024, it would be because of one of two things: If interest rate hikes continue, which would further exacerbate credit debt, or if the conflicts in Ukraine and the Middle East broaden. If one or both of those instances happen, the economists say their recession predictions would look a lot different.
