Which recession? Professional forecasters raise expectations for the US economy in 2024 | News

NEW YORK – This year appears to be much better for the U.S. economy than business economists predicted just a few months ago, according to a survey released Monday.

The economy is expected to grow 2.2 percent this year after adjusting for inflation, according to the National Association for Business Economics. That's up from the 1.3 percent that economists from universities, businesses and investment firms had predicted in the association's previous survey in November.

It's the latest signal of strength for an economy plagued by recession forecasts. High interest rates intended to bring inflation under control were intended to slow the economy, it was said. High interest rates slow the economy by making mortgages and credit card bills more expensive, for example, in the hope of slowing fuel inflation.

But even with very high interest rates, the labor market and U.S. household spending remained remarkably resilient. This in turn has raised expectations for the future. Ellen Zentner, chief U.S. economist at Morgan Stanley and president of NABE, said a variety of factors were behind the 2024 hike, including both government and household spending.

Economists also more than doubled their estimates for the number of jobs created across the economy this year, although it would still likely be lower than last year.

Providing further impetus is the fact that inflation has cooled since its peak two summers ago. Although prices are higher than consumers would like, inflation has slowed enough that most forecasters surveyed expect rate cuts in mid-June.

Public frustration over inflation has become a central issue in President Joe Biden's re-election bid.

Although inflation measures have fallen from their highs and are nearing the Federal Reserve's target, many Americans remain dissatisfied that average prices are still about 19 percent higher than when Biden took office.

Of course, it takes a notoriously long time for interest rate changes to take hold in the economy and have their full impact.

That means previous rate hikes that began two years ago could still ultimately push the economy into recession.

In its survey, NABE stated that 41 percent of respondents cited high interest rates as the biggest risk to the economy.

That was more than double all other reactions, including fears of a possible credit crunch or an expansion of wars in Ukraine or the Middle East.

While the outlook for the US economy remains positive, expectations for the international economy are less optimistic. On Monday, the head of the World Trade Organization warned that war, uncertainty and instability would weigh on the global economy and called on the bloc to reform.

Higher prices for food, energy and other essential goods are putting a strain on people's pockets and “fueling political frustration,” said Ngozi Okonjo-Iweala, director-general of the WTO.

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