New York – AA
Posted on: Sunday, January 15, 2023 – 9:48 PM | Last update: Sunday, January 15, 2023 – 9:48 PM
Economists expect interest rates to rise to tip the US economy into recession next year, according to the latest quarterly survey by The Wall Street Journal.
On average, economists and academics polled by the newspaper put their forecasts on the likelihood of a recession in the next 12 months at 61%, little changed from 63% in the October poll.
The Fed initially hoped it could bring down inflation only with slowing economic growth rather than with outright deflation, an outcome it called a “soft landing”.
But three-quarters of respondents said the Fed will not deliver even a soft landing this year, despite more optimistic inflation expectations.
According to the annual change in the consumer price index, inflation eased from 9.1% last June to 6.5% in December, and economists expect it to decline to 3.1% by the end of this year, which is a lower end point than the previous one, compared to the 3.3% they expected in the last poll in October when They see it ending 2024 at 2.4%, little change from the previous poll.
“While recent inflation data showed some progress, some persistent categories such as basic services are tied to the labor market, suggesting there is still a ‘long way to go’ for the Fed,” said economist Matthew Lisetti.
“The Fed will remain on its hard line to restore balance in the labor market and price stability, which in our opinion will lead to a sharp rise in unemployment and recession,” he added.
