NEW YORK (AP) — Most business economists think the U.S. economy could avoid a recession next year, even if the job market ends up weakening under the weight of high interest rates, according to a survey released Monday.
Only 24% of economists surveyed by the National Association for Business Economics said they see a recession in 2024 as more likely than not. The 38 surveyed economists come from such organizations as Morgan Stanley, the University of Arkansas and Nationwide.
Such predictions imply the belief that the Federal Reserve can pull off the delicate balancing act of slowing the economy just enough through high interest rates to get inflation under control, without snuffing out its growth completely.
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High rates work to slow inflation by making borrowing more expensive and hurting prices for stocks and other investments. The combination typically slows spending and starves inflation of its fuel. So far, the job market has remained remarkably solid despite high interest rates, and the unemployment rate sat at a low 3.9% in October.
Plenty of economists have been saying that avoiding a significant recession has been entirely possible. A recession is generally defined by at least two successive quarters of GDP decline, and while this did technically happen in 2022, the second quarter was only -0.6%, and the following quarter was back up to +2.7%.
It really needs to be stressed that not all bad economic circumstances are recessions. That’s a very specific thing.
Recession doesn’t have a hard definition. At best economists only admit to recessions when they are already in progress.
There’s some amount of fuzziness, yes, and as I said, most economists wouldn’t call that 2022 dip a meaningful recession, but regardless, a recession is absolutely, by definition, a contraction in GDP. That has not been happening. GDP growth has been above +2% for the last five quarter, and in Q3 of this year, it was +5%.
There is no economist alive that will tell you that five quarters of GDP growth is a recession, because words have meanings.
Edit: And before you ask, yes, even adjusting for inflation, it’s been five quarters of GDP growth. This doesn’t imply that there are no economic problems happening, but a recession is not one of them. Not all bad weather is a tornado.
I don’t necessarily disagree with your overall point, but GDP is just a measure commonly used to designate an economic recession. Downward movement in GDP is not the definition of a recession, though it’s a reliably used indicator. There’s a reason the US uses a voting body of economists to say there’s a recession rather than an algorithm linked to GDP numbers.
I don’t know why we let the economists define our terms. Be like doctors redefining illness to only being one disease and announcing that they cured all illnesses
No, that would be like people re-defining all sickness to be a cold, and then getting annoyed when their doctors tell them that Chlamydia is not, in fact, a cold and won’t be cured by time and Tylenol.