The probability of the U.S. hitting a recession within the next year is about 44 percent, according to a new Wall Street Journal survey of leading economists.
That’s the highest probability for a recession in the next year since the newspaper began asking the question in 2005, the Journal noted.
Before the 2007 to 2009 recession, economists assigned a 38 percent probability of a recession. Before the 2020 recession, they gave the economy a 28 percent probability of hitting a significant economic downturn.
Former Treasury Secretary Larry Summers said Sunday on NBC’s “Meet the Press” that, based on historical trends, the economy will likely hit a recession by the end of the year.
“Nothing is certain, and all economic forecasts have uncertainty,” said Summers. “My best guess is that a recession is ahead.”
Recession fears have spread rapidly amid soaring inflation, disrupted supply chains and the Federal Reserve’s interest rate spike to 1.75 percent, the fastest rate increase seen in 30 years. The stock market has also taken a plunge into bear market territory.
The 53 economists in the Wall Street Journal survey — who were polled from June 16 to June 17, after the most recent interest rate hike — said they expect the Fed to raise interest rates to 3.3 percent by the end of the year.
The Biden administration has fought back against recession fears, arguing low unemployment rates and strong job growth are indicators of a healthy economy.
Treasury Secretary Janet Yellen on Sunday said the economy will slow and it would be difficult to fight off a recession.
“That’s going to take skill and work,” she told ABC’s “This Week” moderator George Stephanopoulos. “But I believe it’s possible. I don’t think recession is inevitable.”
Yet more than half of Americans say the economy has already hit a recession as inflation registered a 40-year high last month and gas prices have doubled at pumps.