Only 25% Of Experts Predict US Recession In 2024, China Conflict And External Factors Pose Risk: Survey

In a recent survey, only 25% of business economists and analysts foresee a recession in the United States in 2024. The potential downturn is likely to be triggered by external factors, such as a conflict involving China, rather than domestic economic issues like increased interest rates.

What Happened: The National Association of Business Economics (NABE) conducted a survey, the results of which were released on Monday. The survey revealed that the majority of respondents believe that a recession in 2024 would be due to an external shock, such as a conflict with China, rather than domestic economic factors like increased interest rates, reported the Associated Press.

Despite this, the survey also indicated that year-over-year inflation is expected to exceed 2.5%, which is higher than the Federal Reserve’s 2% target, through 2024.

Sam Khater, the chief economist at Freddie Mac and chair of the association’s economic policy survey committee, noted that the panelists are more optimistic about the domestic economy’s outlook. This optimism is fueled by the combination of declining inflation and robust growth, which has raised hopes that the Fed can achieve a “soft landing” by conquering inflation without causing a recession.

However, the survey also highlighted concerns about potential political tensions, particularly the risk of a conflict between China and Taiwan, which 63% of respondents consider to be at least a “moderate probability.”

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Additionally, 85% of respondents are worried about political instability in the United States before or after the Nov. 5 presidential election, and 57% believe that budget policies need to be more disciplined.

Why It Matters: The survey results are in line with the concerns expressed by experts in recent months. For example, Callum Thomas, the head of research and founder of Top Down Charts, has warned that the reacceleration of the economy could prompt the Fed to raise interest rates instead of cutting them, posing a risk to the stock market.

Similarly, Amundi, a European asset management firm, has predicted a slowdown in the U.S. economy, which could lead to a decline in the performance of top stocks in 2024.

Moreover, Campbell Harvey, a Canadian economist and researcher at Duke University, has also forecasted a slowdown for the U.S. economy in 2024.

These warnings, coupled with the recent survey results, suggest that while the immediate risk of a recession may be diminishing, external factors and political tensions could still pose significant threats to the U.S. economy in the coming year.

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