A majority of the country’s business economists expect the US recession to start this year earlier than previously forecast, after several reports showed the economy is surging despite higher interest rates.
Fifty-eight percent of the 48 economists who responded to a survey by the National Association for Business Economics envision a recession this year, the same proportion as the December NABE survey. But only a quarter think that the recession will start at the end of March, only half the proportion who think that in December.
The findings, reflecting a survey of economists from business, trade associations and academia, were released Monday.
A third of economists who responded to the survey now expect a recession to begin in the April-June quarter. One-fifth think it will start in the July-September quarter.
The delay in economists’ expectations that a recession would begin followed several government reports showing the economy was still strong even as the Federal Reserve raised interest rates eight times in a desperate bid to slow growth and curb high inflation. .
In January, employers added more than half a million jobs, and the unemployment rate hit 3.4%, the lowest rate since 1969.
And sales at retail stores and restaurants jumped 3% in January, the sharpest monthly gain in nearly two years. That suggests that overall consumers, who drive most economic growth, are still feeling financially healthy and willing to spend.
At the same time, several government releases also indicated that inflation rose again in January after weakening for several months, amid fears that the Fed will raise benchmark rates higher than previously expected. When the Fed raises key rates, it usually leads to more expensive mortgages, car loans and credit card debt. Interest rates on business loans are also rising.
Less credit can then damage the economy and even lead to a recession. Economic research released on Friday found that the Fed could never reduce inflation from its recent highs without triggering a recession.
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