Famed American Economist Paul Samuelson years ago joked, “Economists have predicted nine of the last five recessions,” and forecasting today remains as fraught with peril as ever. After all, calculations from Bloomberg have shown a 50% or greater chance of recession over the ensuing 12 months since last August, yet real GDP growth for Q4 2022 came in at an impressive 2.6%, the Atlanta Fed’s current estimate for Q1 2023 growth is 2.5% and the latest projections from the Federal Reserve call for GDP to grow 0.4% this year and 1.2% in 2024.
To be sure, the Bloomberg recession estimate now stands at 65%, while the latest read on the forward-looking Leading Economic Index (LEI) fell by 0.3% in February. The keeper of that gauge, The Conference Board, asserted, “While the rate of month-over-month declines in the LEI have moderated in recent months, the leading economic index still points to risk of recession in the U.S. economy. The most recent financial turmoil in the U.S. banking sector is not reflected in the LEI data but could have a negative impact on the outlook if it persists. Overall, The Conference Board forecasts rising interest rates paired with declining consumer spending will most likely push the U.S. economy into recession in the near term.”
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