U.S. recession probability 44% in one year
The Wall Street Journal (WSJ), a U.S. daily, reported on the 19th that the average answer to the “probability of an economic recession in the next 12 months” was 44% as a result of a survey of 53 economists on the 16th to 17th (local time), shortly after the U.S. Federal Reserve raised its key interest rate by 0.75%.
The WSJ analyzed that this is the highest figure since 2005 when the related survey began, and that the U.S. economy has already entered an economic recession or can be seen just before that.
In December 2007, when the global financial crisis began, 38% of the respondents said the economic recession would come within 12 months, and 26% in February 2020, just before the COVID-19 outbreak. The WSJ pointed out that the possibility of an economic recession increased rapidly as inflationary pressure remained strong and the Fed took increasingly aggressive measures to curb prices. Raising lending rates, disruption in the global supply chain, and rising raw material prices due to the war in Ukraine were also cited as reasons.
Economists polled forecast an average of 6.97 percent for the U.S. Consumer Price Index (CPI) at the end of this year. It was revised up 1.45 percentage points from 5.52 percent in April. The Fed’s forecast for the end of the year, which was 2.014% in a April survey, also jumped to 3.315% in this survey.
The Joe Biden administration is focused on dispelling concerns about a recession. U.S. Treasury Secretary Janet Yellen appeared on ABC and said, “We expect the economy to slow down as it moves to a stable growth period,” stressing, “The economic downturn is not inevitable.” “The U.S. labor market is the strongest since World War II,” Yellen said. “We expect inflation to slow down soon.”
White House National Economic Commission Chairman Brian Dees also appeared on CBS and Fox News on the same day, drawing a line on the possibility of an economic recession, saying, “Many people seem to underestimate the strength and resilience of the U.S. economy.”
President Biden said in an interview with the Associated Press on the 16th, “The economic downturn is not inevitable,” adding, “We are in a stronger position than any other country in the world to overcome inflation.”