A Recession Is No Longer the Consensus

livemint.com:

Economists are turning optimistic on the U.S. economy. They now think it will skirt a recession, the Federal Reserve is done raising interest rates and inflation will continue to ease.

In the latest quarterly survey by The Wall Street Journal, business and academic economists lowered the probability of a recession within the next year, from 54% on average in July to a more optimistic 48%. That is the first time they have put the probability below 50% since the middle of last year. The median probability was 50%, in effect a coin flip.

“The probability of recession continues to recede in the U.S. as the banking turmoil subsides and strong labor market resilience and rising real incomes support consumer demand," BMO economists Doug Porter and Scott Anderson said in the survey. Fueling the optimism are three key factors: inflation continuing to decline, a Federal Reserve that is done raising interest rates, and a robust labor market and economic growth that have outperformed expectations.

Economists on average expect gross domestic product, the value of all the goods and services produced in the country adjusted for inflation, to increase 2.2% in the fourth quarter of 2023 from a year earlier. That is a sharp upward revision from the average 1% growth forecast in the last survey. Economists trimmed their forecast for next year, to 1% from 1.3% in the July survey, but expect the economy to keep growing in 2024 and 2025 and the unemployment rate to rise but hover just above 4%—a historically low level.

Economic growth and job creation are expected to be weak in the first half of 2024. Economists predict GDP will increase at an anemic 0.35% annual rate in the first quarter and 0.6% in the second. They expect employers will add