top of page

61% of U.S. Economists Predict a Recession within 1 Year

With the first U.S. interest rate decision of the year imminent, more than half of economists expect a recession this year, a survey found. They predicted that prices were getting higher but not enough to stop them from raising rates, and that they would have to wait until next year for rates to go down.

On the 15th (local time), the Wall Street Journal (WSJ) released the results of a quarterly survey of 71 economists from June 6 to 10. A total of 61 percent expect the U.S. economy to slip into recession in the next 12 months, down from 63 percent in last October's survey. The WSJ said that when asked about a time other than the actual recession, the percentage of respondents who expect a recession in the future is usually 30~40%, and this month's figure is also above average.

In general, when gross domestic product (GDP) declines for two consecutive quarters, the economy is considered to have entered a recession. However, the U.S. government uses the judgment of the National Institute for Economic Research (NBER), a nonprofit academic organization, as a criterion in its presentations. The NBER considers a recession to be "when economic activity across the economy is severely declining and the phenomenon persists for more than a few months."

On average, experts surveyed predict that U.S. GDP will increase by 0.1 percent in the first and fourth quarters of this year and decrease by 0.4 percent in the following quarter. Growth is not expected in the third and fourth quarters, and 0.6 percent growth is expected in the fourth quarter. Respondents also expected annual U.S. GDP growth of just 0.2 percent this year. This is half of last October's forecast (0.4%).

Greg Darko, chief economist at multinational consultancy EY Parthenon, argued that "services activity remains strong, but the housing sector is shaken by rising mortgage rates and manufacturing activity is stagnant." "Both suggest a broader recession is coming," he said.

Earlier, Bank of America (BoA) Chief Executive Officer Brian Moynihan said in a conversation with investors shortly after the earnings call on Jan. 13 that "the baseline scenario this year assumes a modest recession." At the same time, he planned a new downside scenario: "If the unemployment rate rises to 5.5 percent at the beginning of this year and is above 5 percent by the end of next year."

Survey respondents downgraded their GDP forecasts, pointing to continued inflation and the U.S. Federal Reserve's interest rate hikes to keep pace. The U.S. Department of Labor said in a Jan. 12 announcement that the U.S. consumer price index (CPI) rose 6.5 percent last month. That's down from June last year (9.1 percent), the highest in about 41 years. Experts surveyed by the WSJ said in October that the U.S. CPI would rise to 3.3 percent by the end of this year, but this survey lowered it to 3.1 percent. At the same time, it estimated that by the end of 2024, the CPI increase will fall to 2.4%.

Brett Ryan, an economist at Germany's Deutsche Bank, told the WSJ that "while price containment is making some progress, there is still a long way to go" and that "the U.S. economy will eventually fall into recession as the Fed will continue to tighten."

Currently, the benchmark interest rate in the United States is in the range of 4.25~4.5%. The Fed will announce its benchmark interest rate after its first Federal Open Market Committee (FOMC) meeting of the year on the 1st of next month.

Experts in the survey said the Fed would have to raise interest rates to 5% to keep prices in check. When asked the closest point the Fed would stop raising rates and turn to cutting rates, 36.9 percent said the first and fourth quarters of 2024. The second highest number of responses was in the fourth quarter of this year (30.8 percent), while the second and fourth quarters of this year were the lowest at 3.1 percent. [FinancialNews]

Recent Posts

See All


bottom of page