Economists at Bank of America reversed their forecast for a recession in the U.S. but other major financial outlets are sticking with their recession calls. Read on.
In addition to upward revisions to their forecasts for U.S. GDP growth in 2023 and 2024, the BofA economists altered their expectations for when and how the Fed cuts rates. The bank’s economists now see them beginning later — June 2024 — and proceeding at a slower pace.While a few economists, including those at Morgan Stanley and Goldman Sachs Group Inc., have maintained throughout the past year that the U.S.
Still, Deutsche Bank AG’s Peter Hooper and Matthew Luzzetti say the line between a mild recession and a soft landing is “increasingly fine,” a sentiment increasingly echoed by others in the recession camp. A recent survey of business economists showed a strong majority now say the odds of the U.S. entering a recession in the next 12 months are 50 per cent or less.Article content
In a recent speech, Cleveland Fed president Loretta Mester nodded to the change in tune among businesses in her region. At the end of 2022, “many of our business contacts were telling us they expected the economy to enter a recession this year,” Mester said. “Now, most think there won’t be a recession this year.”
The backbone of the economy and its resilience is the labour market. Low unemployment, steady hiring and solid wage growth have given American households the wherewithal to keep spending. Legislation championed by the Biden administration is also giving an unexpected boost to economic growth, a trend that could add to reasons why a U.S. recession may be delayed or even averted.
But the U.S. is not out of the woods yet. Many economists say the cumulative impact of monetary tightening has yet to be felt, and while inflation has eased, continued resilience in the labour market and consumer spending could slow inflation’s descent, leading to more Fed tightening.Article content
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