NABE Survey Says Economists Increasingly Sure US will Avoid Recession

According to a recent poll conducted by the National Association of Business Economics, a growing number of economists are confident that the U.S economy will steer clear of a recession in the upcoming year.

In the most recent NABE survey, which was published on Monday, an overwhelming 91% of respondents expressed a cautious outlook, assigning a probability of 50% or less to the possibility of the U.S. entering a recession within the next 12 months.

The percentage has increased since the October survey, showing a significant change compared to the previous year. During that time, most economists predicted a recession due to the Federal Reserve's efforts to combat high inflation by raising interest rates.

Avoid RecessionPhoto byreuters

According to recent economic data, there has been a noticeable increase in optimism, which is reflected in the survey results. In fact, consumer sentiment reached its highest level in two and a half years, further supporting this positive trend. Inflation has been declining at a rate that has surpassed expectations, while the labor market is showing signs of cooling without any signs of a collapse.

The Federal Reserve policymakers have maintained the policy rate within the range of 5.25%-5.5% since July. However, they have indicated their intention to lower rates this year if inflation continues to decline.

Economists surveyed by NABE anticipate an increase in corporate sales and profit margins this year. They also note that supply chain issues and labor shortages are gradually improving, which could have a positive impact on the inflation outlook.

In the most recent survey, a significant increase was observed in the number of respondents who reported no shortages of input materials. The percentage rose from 46% three months ago to 63%. Similarly, over half of the respondents reported no labor shortages, showing an improvement from the previous report's 38%. According to NABE, both readings are considered to be among the best since the pandemic started.

A recent survey of 57 NABE members conducted from December 28th to January 9th reveals that higher interest rates, growing geopolitical instability, and rising costs are the main concerns for the overall health of business conditions in the upcoming year.

Economists have pointed out that lower interest rates, reduced costs, and improved labor availability are the key factors that could potentially have a positive impact on the outlook.

The Source: reuters