‘US economy will escape recession, but uncertainty persists until 2024’, says Economists
Federal Reserve’s own staff — are predicting the US will escape a recession, though it’ll be well into 2024 before anyone can be sure of it. Fed Chair Jerome Powell says he expects the central bank to navigate a path where the US economy expands with inflation rates falling back to the 2% target, though the task will be challenging.
On one side, a failure to act aggressively enough against price pressures could result in rebounding inflation that requires harsher moves later. There’s also the risk that the lagged effects of what’s already the most aggressive tightening in four decades could tip the economy into recession.
“Unfortunately, I don’t think the picture on any of this will be clear for at least two quarters, though the fact that inflation has come down has bought the Fed some time, for now," said Jonathan Millar, a senior economist at Barclays Capital Inc. “The Fed seems to be well ahead of markets in recognizing that the path to a soft landing is far from assured." The National Bureau of Economic Research’s business cycle committee, the official arbiter of US downturns, defines a recession as a significant decline in economic activity spread across the economy that lasts more than a few months.
It can take as long as 21 months to declare such an event, once the group processes what can be initially mixed reports and data revisions. While there’s no formal definition of a soft landing, most economists see it as the moderation of inflation without a recession or serious harm to the labor market.
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