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NEW YORK — A survey of national economists found that more companies are now expecting their firms to lay off jobs and spend less on expansion for the first time since the pandemic, a sign that the Federal Reserve’s push to raise interest rates is faltering , his work too slowly makes the economy.
But the survey shows business owners are still concerned that Fed decision-making could weigh too heavily on the economy and potentially plunge the US into a recession this year.
The January survey by the National Association for Business Economics found that respondents gave an average score of -7 for planned hiring at their companies, compared to a previous reading of +8 in October when NABE conducted its previous survey.
However, the survey shows that because of inflation, companies still expect to pay higher wages for the workers they are sticking with.
“The results of NABE’s January 2023 business conditions survey indicate widespread concerns about entering a recession this year,” NABE President Julia Coronado said in a statement.
To fight inflation, the Fed has aggressively raised interest rates to slow the US economy without plunging it into a recession known as a “soft landing.” The Fed is expected to hike rates again this week, albeit at a slower pace than in the past as inflation indicators have cooled in recent months.
One sign of inflation slowing is the cost of materials portion of the survey. Respondents to the NABE survey showed material costs at a score of 47, 5 points lower than October and well below July’s reading of 76. More respondents now expect material costs to fall rather than rise this year.
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