The U.S. economy is expected to fall into a recession later this year, said a majority of economists surveyed in an influential semi-annual poll.
Fifty-eight percent of economists said they expect the economy to be in a recession to begin this year, according to the National Association for Business Economics (NABE) Policy Survey.
The largest share—24 percent—said they expect the recession to begin in the third quarter of this year. Sixteen percent said they expect the recession to begin in the second quarter, which begins at the end of this week as April starts. Another 13 percent said the recession will begin in the fourth quarter of this year.
Five percent said they believe the economy is already in a recession. That’s down significantly from the 19 percent who expressed the view that the economy was currently in a recession when asked in the August survey.
Twelve percent expect a recession to start in the first half of next year. Twenty-two percent said they expect no recession until the second half of next year or later.
“More than half of NABE Policy Survey panelists expect a recession at some point in 2023,” said NABE President Julia Coronado, president and founder, MacroPolicy Perspectives LLC.
There is widespread agreement that inflation will not come down to the Federal Reserve’s two percent target without a recession. More than two-thirds—69 percent—said they are “not very confident” or “not at all confident” that the Fed will be able to bring inflation down to the target in the next two years without inducing a recession. That includes 43 percent who are “not very confident” and 26 percent who are “not at all confident.”
Twenty-three percent said they are “somewhat confident” that inflation will come down without a recession. Just four percent described themselves as “confident” of that outcome and three percent as “very confident.”
More than seven in ten panelists believe that growth in the consumer price index will remain above 4 percent through the end of this year. Twenty-six percent said over four percent inflation through the end of the year is “very likely” and 45 percent said this is “likely.”
Twenty-seven of the economists surveyed suggest that CPI inflation is “unlikely” or “very unlikely” to remain above 4% through the end of 2023.
“Panelists generally agree on the outlook for inflation and the consequences of rate hikes from the Federal Reserve,” added NABE Policy Survey Chair Mervin Jebaraj, University of Arkansas. “More than seven in ten panelists believe that growth in the consumer price index (CPI) will remain above 4 percent through the end of 2023, and more than two-thirds are not confident that the Fed will be able to bring inflation down to its 2 percent goal within the next two years without inducing a recession.”
Despite this, economists have a far better opinion about Fed policy than they did last year. Fifty-eight percent say they view current monetary policy to be “about right,” up from 46 percent in August and 22 percent a year ago. Twenty-six percent said monetary policy is too accommodative, down from 44 percent in August and 77 percent a year ago. Fourteen percent say policy is too restrictive, up from nine percent in August and none in March of 2022.
On the other hand, the share of economists who say fiscal policy is too stimulative continued to rise. Fifty-three percent said fiscal policy is too stimulative, up from 51 percent in August and 50 percent last March. Forty-one percent view fiscal policy as about right, down from 44 percent in the two prior surveys. Five percent said fiscal policy is too restrictive, up from three percent in August and four percent last March.