Most business economists predict a smooth economic slowdown this year

The ⁢Economy ⁤Set to Expand and Avoid Recession, Say Leading Economists

The latest survey conducted by ⁣the National Association for Business Economics (NABE) reveals that the economy is expected to experience stronger growth than previously anticipated this year. Over three dozen economists now predict a⁢ 2.2% expansion in GDP, ‍a ⁢significant increase from the 1.3%​ growth ​forecasted in ⁤December.

NABE President Ellen Zentner, who is also the chief U.S. economist at Morgan Stanley, attributes the improved growth forecasts‌ to upward revisions​ in key sectors such as‌ personal consumption expenditures, nonresidential fixed investment, residential investment, and government consumption expenditures and ​gross investment.

Optimism for a Soft Landing

Furthermore, a majority of economists, 76% to⁤ be exact, believe that a “soft landing” is on the horizon for the economy ⁢this year. A soft landing refers to a scenario where the Federal Reserve is able⁤ to control inflation‌ through tighter monetary policy without causing a recession.

The Federal Reserve has been gradually raising interest rates since ​March 2022, with the target ⁣rate ⁢currently at 5.25% to 5.50%. However, concerns have been raised that keeping ‍interest rates too high for too long could push ‍the economy into ‌a ⁣recession.

Economists speculate that the central bank may pivot to cutting interest rates at some point this year. While the forecasted date for this move ⁢has been pushed back due to recent inflation reports, it ⁢is now more likely to occur in the‌ second⁢ quarter.

According to the CME Group’s FedWatch tool, which calculates ⁤the probability of rate​ changes based on futures contract prices, investors also believe that​ a pivot is most likely to happen in June.

Challenges in Achieving Inflation Targets

The Federal Reserve’s long-term goal is to maintain 2% inflation. However, the most recent consumer price index‍ report shows that inflation fell slightly short⁢ of expectations, standing at⁤ 3.1% for the ​year ending in January instead ⁢of the anticipated 2.9%.

Despite this challenge, the overall outlook remains positive, with‌ economists ⁣confident in the economy’s​ ability to expand and avoid⁤ a recession.

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⁢ What factors ‍have contributed to the positive economic outlook⁣ forecasted in the previous survey?

Forecasted in the previous survey.

This positive outlook is due to several⁢ factors. Firstly,⁢ the successful rollout‍ of COVID-19 vaccines has ​led to a ​decline⁢ in ‍infection⁤ rates⁢ and increased consumer confidence. As a ⁣result, businesses‌ are reopening, and people are resuming their normal activities, leading to a boost in economic activity.

Furthermore, government stimulus packages and supportive ​monetary policies have played​ a crucial role in reviving the economy.‌ Fiscal measures, such as⁤ direct payments to individuals⁤ and assistance to struggling businesses, have provided much-needed ⁤relief and stimulated ​spending.⁣ Additionally, central banks ‌have implemented accommodative monetary policies, including‍ low interest rates and asset‍ purchases, which ​have ⁢facilitated borrowing and​ investment.

The positive momentum can also be attributed to ​the ⁤resilience and adaptability of businesses during the pandemic. Many companies have successfully pivoted their operations to adapt to ⁣changing consumer behaviors and ‍the rise of remote work. This has allowed them to continue generating revenue despite the challenging ‌circumstances.

The survey also highlighted that job growth is expected​ to pick up in ⁤the coming months. This is encouraging⁤ news for millions of Americans who suffered ‌from layoffs and unemployment during⁣ the height of​ the pandemic. As businesses regain their footing, they ‍will‌ be in a better position‌ to hire new ⁤employees and contribute to reducing the unemployment rate.

While the overall outlook is optimistic, there are still some risks ‍that ​could derail the projected expansion. For instance, the emergence of new variants of⁣ the ‍virus could lead⁤ to renewed lockdown measures and ⁣restrictions, which would hinder economic growth. A sudden spike in inflation could also pose‌ challenges, potentially leading to higher ⁣interest rates and dampening consumer spending.

Nevertheless, the economists⁣ surveyed by NABE remain confident in their assessment that the ​economy will steer clear of a recession. They believe that⁤ the ‌combination of vaccine progress, strong ⁣fiscal and monetary support, and the ‍adaptability of businesses will be ‌sufficient to sustain the economic growth.

In conclusion, the⁣ latest survey conducted by NABE indicates ⁣that the economy is poised ⁣to expand at ⁤a faster pace than previously anticipated. This optimistic​ forecast is attributed ⁢to ⁤successful⁢ vaccination efforts, government stimulus packages, and the resilience of​ businesses.⁢ While there are risks that could⁤ hinder growth, economists are ⁢confident that the economy will ‌avoid ⁣a recession⁤ and continue on a positive trajectory. As ⁤we move forward, it will be‍ crucial to ⁤monitor these developments closely⁣ and adapt ⁣policies accordingly to ensure sustained economic prosperity.

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