Just a quarter of business economists and analysts expect the United States to fall into recession this year. And any downturn would likely result from an external shock \u2013 such as a conflict involving China \u2013 rather than from domestic economic factors such as higher interest rates. But respondents to a National Association of Business Economics survey released Monday still expect year-over-year inflation to exceed 2.5 per cent \u2014 above the Federal Reserve\u2019s 2 per cent target \u2014 through 2024.<\/p>\n
A year ago, most forecasters expected the US economy \u2013 the world\u2019s largest \u2013 to slide into a recession as the Fed raised interest rates to fight a burst of inflation that began in 2021. The Fed hiked its benchmark rate 11 times from March 2022 to July 2023, taking it to the highest level in more than two decades. Inflation has fallen from a peak of 9.1 per cent in June 2022 to 3.4 per cent in December. But the economy unexpectedly kept growing and employers kept hiring and resisting layoffs despite higher borrowing costs.<\/p>\n
The combination of tumbling inflation and resilient growth has raised hopes \u2013 reflected in the NABE survey \u2013 that the Fed can achieve a so-called soft landing: vanquishing inflation without the pain of a recession. \u201cPanelists are more optimistic about the outlook for the domestic economy,\u2019 said Sam Khater, chief economist at mortgage giant Freddie Mac and chair of the association\u2019s economic policy survey committee. The Fed has stopped raising rates and has signalled that it expects to reduce rates three times this year.<\/p>\n
But a growing share of business forecasters worry that the Fed is keeping rates unnecessarily high: 21 per cent in the NABE survey called the Fed\u2019s policy \u201ctoo restrictive\u201d, up from the 14 per cent who expressed that view in August. Still, 70 per cent say the Fed has it \u201cabout right.\u201d What worries respondents are the chances of a conflict between China and Taiwan even if it isn\u2019t an outright war: 63 per cent consider such an outcome at least a \u201cmoderate probability.\u201d<\/p>\n
Likewise, 97 per cent see at least a moderate chance that conflict in the Middle East will drive oil prices above USD 90 a barrel (from around USD 77 now) and disrupt global shipping. Another 85 per cent are worried about political instability in the United States before or after the November 5 presidential election.\u00a0 The respondents are also increasingly concerned about US government finances: 57 per cent say budget policies \u2013 which have created a huge gap between what the government spends and what it collects in taxes \u2013 need to be more disciplined, up from 54 per cent in August.<\/p>\n
They say the most important objectives of government budget policy should be promoting medium- to long-term growth (cited by 45 per cent of respondents) and reducing the federal deficit and debts (42 per cent). Coming in a distant third \u2013 and cited by 7 per cent \u2014 is the goal of reducing income inequality.<\/p>\n","protected":false},"excerpt":{"rendered":"
Just a quarter of business economists and analysts expect the United States to fall into recession this year. And any\u2026<\/p>\n","protected":false},"author":28,"featured_media":30915,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[72],"tags":[8899,158,9961,9323,312,9322,359,9960,9959,165,95],"class_list":["post-30914","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economy","tag-2024-us-presidential-election","tag-china","tag-debts","tag-economists","tag-economy","tag-federal-reserve","tag-inflation","tag-political-risks","tag-recession-risks-reduced","tag-taiwan","tag-usa"],"reading_time":"3 min read","_links":{"self":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts\/30914","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/users\/28"}],"replies":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/comments?post=30914"}],"version-history":[{"count":0,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts\/30914\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/media\/30915"}],"wp:attachment":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/media?parent=30914"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/categories?post=30914"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/tags?post=30914"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}