Inflation above 4% in 2023 end, recession expected in US: NABE survey

28 Mar '23

2 min read

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A recession is likely imminent this year in the United States, which may face high inflation well into 2024, a majority of economists predicted in the semiannual policy survey by the National Association for Business Economics (NABE). More than two-thirds of the respondents also see inflation remaining above 4 per cent at the end of this year.

Economists also slightly raised the chances of the Federal Reserve achieving a so-called ‘soft landing’, i.e., reducing inflation while avoiding a recession, from 27 per cent in August last year to 30 per cent in March this year.

A mere 5 per cent of respondents believe the United States is currently in the midst of a recession—far fewer than the 19 per cent in its previous survey, NABE president Julia Coronado said in a statement.

About three-quarters (74 per cent) of survey respondents state that tightening controls on US exports to China of sensitive high-technology goods is a step worth taking in the trade relationship with China.

In addition, 35 per cent believe the United States should maintain existing tariffs on imports of Chinese goods, and 27 per cent are in favour of restrictions on outbound US investments in China. In contrast, 29 per cent of respondents support reducing or eliminating existing tariffs on imports from China.

Respondents’ views on fiscal policy are similar to those expressed in the August 2022 survey. Slightly more than half of respondents (53 per cent) believe that current fiscal policy is too stimulative—a small increase from the 51 per cent in the last survey. Forty-one per cent of survey respondents find current fiscal policy is ‘about right’, down from 44 per cent in August last year.

Five per cent of respondents believe the current fiscal policy is too restrictive.

Forty-seven per cent of panelists believe that the primary objective of the current fiscal policy should be to promote more robust economic growth in the medium-to-long term, down from 59 per cent in the August 2022 survey.

The second-largest share of respondents (35 per cent) indicates that the primary goal of current fiscal policy should be to reduce deficit and debt levels. A smaller share of respondents (8 per cent) feels that addressing income inequality should be the primary objective of current fiscal policy.

The survey summarised the responses of 217 NABE members, and was conducted between March 2 and March 10.

Fibre2Fashion News Desk (DS)

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