The majority of business economists in the country now predict that the U.S. recession will start later this year than they had anticipated. This is because a number of reports have indicated that the economy has been surprisingly resilient despite steadily rising interest rates.
The National Association for Business Economics surveyed 48 economists, and 58% of them predicted a recession this year. This is the same percentage that responded to the NABE’s survey in December. However, only 25%, or less than half the percentage who believed so in December, believe a recession will have started by the end of March.
The results of the study, which included economists from corporations, trade organisations, and academics, were made public on Monday.
A third of the economists who participated in the survey now predict that a recession will start in the quarter between April and June. One-fifth believe it will begin during the quarter from July to September.
After a number of official data that indicated a still-strong economy even after the Federal Reserve has raised interest rates eight times in a demanding effort to restrict growth and curb excessive inflation, economists have delayed their forecasts of when a downturn will start.
Employers created more than 500,000 new jobs in January, and the unemployment rate dropped to 3.4%—the lowest level since 1969.
Moreover, January saw a 3% increase in sales at restaurants and retail outlets, the biggest monthly increase in nearly two years. That indicated that consumers overall, who account for the majority of economic growth, continue to feel financially stable and willing to spend.
In addition, a number of government reports revealed that inflation had been weakening for several months before exploding in January. These reports stoked concerns that the Fed would raise its benchmark rate even more than had been anticipated. Mortgages, auto loans, and credit card borrowing all normally become more expensive when the Fed raises its main rate. Business loan interest rates are also rising.
The economy may therefore suffer and perhaps enter a recession as a result of tighter credit. According to economic study published on Friday, the Fed has never been able to bring inflation down from the high levels it just achieved without triggering a recession.
