The latest forecast from top economists suggests that fears of a recession in the first half of 2024 have dissipated significantly. Compared to the previous survey, the likelihood of negative growth in real gross domestic product (GDP) for the first quarter has decreased from 40.9% to 17.3%. Economists explain that, in normal circumstances, the risk of a recession typically hovers around 15%.
Looking ahead to the April-June quarter, economists now estimate a 23.9% chance of negative GDP growth, down from the previous figure of 40.2%. The odds for the last two quarters of the year have also decreased slightly, now standing at approximately 25% compared to above 24%.
The Philadelphia Federal Reserve’s Survey of Professional Forecasters, which has been conducted quarterly since 1968, provides valuable insights into macroeconomic forecasts. This quarter’s survey suggests a favorable outcome, indicating a “soft landing” for the economy.
According to the forecasters, the economy is expected to expand at an annual rate of 2.1% in the January-March quarter, an improvement from the previous estimation of 0.8%.
Based on an annual average basis, the forecasters anticipate a real GDP growth rate of 2.4% in 2024. This represents an increase of 0.7 percentage points compared to the prior survey.
Furthermore, the labor market is projected to remain robust, with the unemployment rate expected to reach 4% by the end of the year. This is slightly higher than January’s rate of 3.7% but lower than the previous survey’s forecast of 4.2%.
Regarding inflation, as measured by the Federal Reserve’s personal consumption expenditure index, the forecast predicts a continued moderation. It is anticipated that inflation will reach a 2.1% annual rate by the end of the year, slightly below the previously forecasted 2.4%.
In terms of financial markets, stock performance has been mixed in early trading on Friday, while the 10-year Treasury yield has risen to 4.16%.
