Experts Divided on Whether US Will Avoid Recession in 2024

Introduction

The US economy has shown promising signs of avoiding a recession in 2023, but experts have differing opinions on whether the outlook will remain positive in the coming year. While the Federal Reserve‘s efforts to combat inflation have been effective, some economists believe that high interest rates could have a detrimental impact on consumer spending and lead to layoffs. This article examines the perspectives of experts who predict a recession in 2024, as well as those who believe it is unlikely.

Predictions of a Recession

Some experts, such as billionaire investor Ken Griffin, previously anticipated a recession in late 2023 but now expect the US to enter a recessionary environment sometime in the second quarter of 2024. Griffin emphasizes the need for the federal government to reduce deficit spending but expresses skepticism that it will happen due to the upcoming presidential election.

Economists from UBS also predict a recession in the second or third quarter of 2024. They attribute this projection to worsening economic conditions and a slowdown in inflation, which they believe will prompt the Federal Reserve to cut interest rates. Marc Lasry, CEO of Avenue Capital Group, shares this view and states that the doubling of interest rates is putting pressure on consumers and businesses, potentially leading to a recession.

Investor Rob Arnott acknowledges that positive economic data in 2023 does not guarantee that a recession won’t occur in 2024. He highlights that recessions often follow periods of economic growth, and estimates the risk of a recession in the coming year to be around 50-50. Jeffrey Gundlach, CEO of DoubleLine Capital, expects interest rates to decline in 2024 as the US enters a recession, and predicts potential layoffs as some companies implement hiring freezes.

Experts Who Doubt a Recession

Not all experts share the sentiment that a recession is likely in 2024. Bill Adams, chief economist at Comerica Bank, believes that the US will avoid a recession in the upcoming year. Atlanta Federal Reserve President Raphael Bostic also expresses confidence that a recession is not on the horizon, emphasizing instead a potential slowdown and a decrease in inflation.

UCLA economists predict a weak economy in 2024 due to the impact of higher interest rates, but they do not foresee a recession. Bank of America CEO Brian Moynihan similarly expects a slowdown in the economy but believes the US will avoid a recession. He attributes his optimism to strong consumer finances and spending.

Goldman Sachs, known for taking an optimistic view on economic forecasts, estimates only a 15% probability of a recession in 2024. Jan Hatzius, a strategist at Goldman Sachs, anticipates further disinflation and expects inflation to continue to decline.

Conclusion

The outlook for the US economy in 2024 remains uncertain, with experts divided on the likelihood of a recession. While some predict a recession due to high interest rates and worsening economic conditions, others believe that the US will experience a slowdown but avoid a recession. Factors such as the federal government’s fiscal policy, consumer spending, and inflation levels will play crucial roles in determining the economic landscape in the upcoming year.

Source: Now that inflation is slowing, here’s when 10 experts think we’ll see a recession