NEW YORK (AP) — Most business economists think the U.S. economy could avoid a recession next year, even if the job market ends up weakening under the weight of high interest rates, according to a survey released Monday.
Only 24% of economists surveyed by the National Association for Business Economics said they see a recession in 2024 as more likely than not. The 38 surveyed economists come from such organizations as Morgan Stanley, the University of Arkansas and Nationwide.
Such predictions imply the belief that the Federal Reserve can pull off the delicate balancing act of slowing the economy just enough through high interest rates to get inflation under control, without snuffing out its growth completely.
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High rates work to slow inflation by making borrowing more expensive and hurting prices for stocks and other investments. The combination typically slows spending and starves inflation of its fuel. So far, the job market has remained remarkably solid despite high interest rates, and the unemployment rate sat at a low 3.9% in October.
As of the second quarter of 2023, prices are up 15.8% since the beginning of 2021, while wages have climbed 12.8%, based on the latest Bureau of Labor Statistics data.
The trend is a win for workers – a feature of a job market that’s been surprisingly resilient as inflation slows and interest rates rise.
Nonetheless, a gap between household buying power and inflation remains.
At its current pace, workers’ wages aren’t set to recover their loss of total purchasing power until at some point in the fourth quarter of 2024, according to Bankrate’s new Inflation To Wage Index.
So let’s say wages are increasing faster than inflation. A couple articles I looked at said they just started to last quarter, so great, you might be right, but you’ve only been right for a very short while and the buying power that should go along with increasing wages won’t be felt until next year sometime.