Growing Number of Economists Anticipate Recession Will Hit by Middle of Next Year: Survey

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An overwhelming number of economists think a recession will hit the United States by the middle of next year, according to a survey by The National Association for Business Economics (NABE) published on Monday.

The survey (pdf) was conducted between Aug. 1 and Aug. 9 among 198 members of NABE.

It found that 72 percent of economists polled expect a recession to begin by the middle of next year, including 19 percent of those who said the United States is already in a recession, as determined by the National Bureau of Economic Research (NBER).

The NBER defines a recession as a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

The standard definition of a recession is also based on two consecutive quarters of declining gross national product, as has been seen in the United States.

Nine percent of economists polled say the recession will start in the third quarter of this year and another 16 percent say it will begin in the fourth quarter.

More than one-quarter of respondents (28 percent) expect a recession to begin in the first half of 2023, split between 22 percent who see the recession hitting in the first quarter and six percent who forecast it will hit in the second quarter.

Another 20 percent of respondents do not expect a recession to begin before the second half of 2023.

Elsewhere, 73 percent of respondents said they are “not very confident” or “not at all confident” that the Federal Reserve will be able to bring inflation down to its 2 percent goal within the next two years without prompting a recession. Among them, 51 percent said they are not at all confident the Fed can achieve a soft landing, and 21 percent said they are not at all confident.

No Confidence in the Fed

Just 3 percent of economists said they were “very confident” the Fed could achieve its goal without sparking a recession, while 10 percent said they were confident and 14 percent stated they were “somewhat confident.”

“The NABE Policy Survey panelists are concerned about inflation and recession,” said NABE Policy Survey Chair Juhi Dhawan in a statement. “Overall, panelists are not confident that the Federal Reserve will be able to bring inflation down to its 2 percent goal within the next two years without triggering a recession. In addition, roughly one-fifth of panelists believe the United States is already in a recession, while nearly half the panelists—47 percent—expect a recession to begin by the end of 2022 or the first quarter of 2023.”

The survey results come after the Inflation Reduction Act (IRA) was signed into law by President Joe Biden on Aug. 16, and has prompted a mixed response among lawmakers and experts, some of whom argue it could cost Americans more, contrary to what Democrats claim.

A separate poll from The Economist/YouGov conducted from Aug. 13 to 16 found that just a small number of Americans believe the bill will reduce inflation.

Specifically, 13 percent said they believe the $369 billion earmarked for climate and energy expenditures in the bill will decrease inflation, while 38 percent of respondents said they believe it will further worsen inflation.

However, among the economists surveyed by the NABE, the bill appeared to receive broad support. The bill was still being negotiated in the Senate at the time the survey was conducted.

Still, it found that 76 percent of respondents supported the $300 billion deficit-reduction goal of the bill, while 14 percent oppose the provision.

More than two-thirds of the respondents supported the 15 percent minimum corporate tax (69 percent of panelists for it and 26 percent opposed), as well as the expanded Affordable Care Act subsidies and drug-pricing reform provisions (68 percent of panelists in favor, 26 percent opposed) and climate change subsidies, rebates and private-public investments, with 63 percent in favor and 31 percent opposed.