The US is on track for continued sub-trend growth in the summer and fall of this year, but there’s no recession on the horizon, according to the University of California Los Angeles Anderson Forecast released today.
“The oft predicted but never seen ‘recession next quarter’ alarm bells have been silenced in the face of expansionary fiscal policy, new national industrial policy and robust consumer spending,” according to a press release by the UCLA Anderson School of Management.
However, there are risks to the forecast, including the possibility of a government shutdown and geopolitical events upsetting the current growth pattern as well as concerns about the election.
“An important risk of the forecast would be a radically different economic policy after the November elections,” according to the school. “The election results might usher in different national economic policy in 2025. These risks are substantial and bear watching, as they could well drive the economy off the current growth path that is predicted to return the US economy to trend growth of 2.5%.”
The forecast expects labor market constraints will ease in 2025 because of higher immigration rates along with higher wages, which will induce higher labor force participation. Construction of new factories and current industrial policy should also ease production constraints in 2025 and 2026.