Recession fears evaporate in new forecast of top economists

By Greg Robb

Survey paints picture of a soft landing for the U.S. economy

Fears of a recession in the first half of 2024 have melted away like the snow in most of the country this winter, according to a new forecast of top economists released Friday.

Economists now see only a 17.3% chance of negative growth of real gross domestic product in the first quarter. That's down sharply from a 40.9% chance in the previous survey. In normal times, the risk of a recession is around 15%, economists say.

In the April-June quarter, economists now see a 23.9% chance of a negative quarter of GDP growth, down from 40.2%. For the last two quarters of the year, the odds are now about 25%, down from above 24% in the prior survey.

The Philadelphia Federal Reserve's Survey of Professional Forecasters, the oldest quarterly survey of macroeconomic forecasts, began in 1968. It is based on 34 economists.

This quarter's survey paints a picture of a soft landing.

The forecasters predict the economy will expand at a 2.1% annual rate in the January-March quarter, up from their expectation of 0.8% in the last survey.

On an annual average basis, the forecasters expect real GDP to increase 2.4% in 2024. That's up 0.7 percentage points from the prior survey.

The labor market will stay strong, according to the survey, with the unemployment rate finishing the year at 4%, up from 3.7% in January. That's down from a forecast of 4.2% in the prior survey.

Inflation, as measured by the Fed's personal consumption expenditure index, will continue to moderate, ending the year just above the Fed's target at a 2.1% annual rate. That's down from the prior forecast of 2.4%.

Stocks DJIA SPX were mixed in early trading on Friday, while the 10-year Treasury yield BX:TMUBMUSD10Y rose to 4.16%.

-Greg Robb

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02-09-24 1040ET

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