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The US recession that never came and befuddled economists

The yield curve last year had never been so inverted. A sharp painful recession was on the way. It was all but certain. Up until this point in time, the yield curve was always right and economists are predicted a significant economic contraction.

It never came! Now economists are revising their predictions for 2024. According to a survey carried out by the Wall Street Journal, 61% of economist predicted that the US would go into recession in the next 12 month. That has now fallen to just 39% in January 2024. It’s quite a reversal. So what happened?

There have been some positive economic trends: declining interest rates, lower gas prices, income growth outstripping inflation, coupled with a robust job market and resilient consumer spending.

However, despite these optimistic indicators, only a modest growth rate of 1% is expected in 2024. So it may not be a recession, but it will feel like it for many Americans.

It won’t be a recession, but it will feel like one

Source: The Wall Street Journal

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