Economists still expect rising interest rates to push the U.S. economy into recession in the coming year, despite signs that U.S. inflation has started to recede, according to the latest quarterly survey by The Wall Street Journal.
Business and academic economists surveyed by The Wall Street Journal see a 61% chance of a U.S. recession within the next 12 months on average, little changed from 63% in an October 2022 survey. Both numbers are historically high for years without an actual recession.
The U.S. Federal Reserve (referred to as: the Federal Reserve) initially hoped to raise interest rates to push inflation down, but at the cost of a slowdown in economic growth rather than a direct recession, an outcome known as a “soft landing.” However, three-quarters of respondents said the Fed would not achieve a soft landing this year.
Those expectations came despite a slightly more optimistic outlook for U.S. inflation than before. Measured by the year-on-year change in the Consumer Price Index (CPI), the U.S. inflation rate in December 2022 has fallen from 9.1% in June last year to 6.5%. Economists expect U.S. inflation to fall to 3.1% by the end of the year, down from the 3.3% they forecast in an October survey. They expect U.S. inflation to fall to 2.4% by the end of 2024, little changed from the figure in the last survey.
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