Economists are forecasting that there is a 50 percent chance or less of a recession hitting the United States.
Earlier this month, 52 members of the National Association of Business Economics (NABE) were surveyed to get their thoughts on the economy’s trajectory.
Among the respondents, there was improved sentiment after ongoing job gains and higher profit margins.
Some 71 percent of those polled shared that the probability of the U.S. entering a recession in the next 12 months is either 50 percent or less.
While still high, this represents a sharp change of tone from the earlier predictions of an economic downturn from NABE economists earlier this year.
In May, 59 percent of NABE economists reported it was more likely than not that the US will enter a recession in the next year.
NABE President Julia Coronado, the founder, and president of MacroPolicy Perspectives LLC, broke down what these sentiments from economists likely mean.
She explained: “Results of the July 2023 NABE Business Conditions Survey reflect an economy of rising sales and profits, as materials costs decline and stabilizing wages prove less challenging.”
NABE Business Conditions Survey Chair Carlos Herrera, the chief economist of Coca-Cola North America, emphasized that experts now believe a recession is less likely than they did before.
He added: “Additionally, a majority of panellists is more confident about the economy over the next year, as they see the probability of a recession diminishing.”
A recession is defined as happening when a country experiences two-quarters of negative economic growth.
So far, the US has avoided this fate but consumers have been straddled with rising inflation and interest rates over the last year.
Inflation has eased to four percent as of last month and experts are preparing for only one more interest rate rise for the year later this week.
Last week, Goldman Sachs revised its forecast for an economic downturn citing recent changes.
Jan Hatzius, the investment bank’s chief economist, explained: “The main reason for our cut is that the recent data have reinforced our confidence that bringing inflation down to an acceptable level will not require a recession.
“But the easing in financial conditions, the rebound in the housing market, and the ongoing boom in factory building all suggest that the US economy will continue to grow, albeit at a below-trend pace.”
The Federal Open Market Committee (FOMC) is due to discuss interest rates on July 25-26.
