Indications Of Recession Alarm Economists

Although consumer confidence in the US economy improved in November, according to the Conference Board, the economy is still expected to experience a recession within the next 12 months. Due to reduced consumer spending and slowed investment by businesses caused by high borrowing prices, the US economy is projected to enter a recession in the second quarter of 2024.

According to Fannie Mae, GDP is projected to contract 0.4% in 2019 before increasing 1.6% in 2025. From its present range of 5.25 to 5.25 percent, the Federal Reserve will cut the benchmark interest rate to 5.1% in 2019 and 4.5% in 2025, as predicted by Fannie Mae.

If the current series of recessions keeps rolling into 2024, the economy and stock markets are in for a rough ride. The negative correlation between Treasury bond rates and stock prices should continue until 2024, a defining feature of 2023. An increase in the yield on 10-year Treasury notes from below 4% to 5% coincided with the lone significant drop in U.S. stock prices thus far in 2023.

Looking ahead to next year, one should see less volatility and more stability in rates rather than another considerable reduction in yields, especially if that were to be caused by a significant slowdown in economic development. This would be better for the US equities market.

Nearly 70% of the growth in the U.S. economy is driven by consumers. There are indications that the economy is slowing down from its 4.9% annual rate in the third quarter. Recent months have seen a slowdown in wage growth, a decrease in hiring, and inflation. The job gains slowdown has persisted, and consumers’ capacity to maintain their high spending levels is under increasing pressure.

Despite the Fed’s promises to bring inflation back to its 2% objective, the central bank is cautious due to public expectations of price pressures. Their long-term inflation forecasts hit a new high, surpassing those of 2011, and they point out that consumers’ expectations of rising prices might feed into themselves.