There’s no recession for now, but there is still a danger, according to the University of Los Angeles Anderson forecast, released today.
“With core inflation coming down slowly, it’s possible the Fed may continue to tighten monetary policy until we’re in a recession,” the report reads, adding that even with three months of additional data since the previous report, which was published in March, “there has not been much more clarity as to the trajectory of the economy.”
Consequently, as they did in the previous two quarters, Anderson Forecast economists have issued a forecast with two scenarios: one involving a recession the other without a recession.
In the recession scenario, UCLA forecasts GDP growth of 1.2% in the second quarter and then for the economy to contract from the third quarter through the first quarter of 2024 before beginning to grow again in the second quarter.
In the no-recession scenario, the report forecasts GDP growth of 2.6% in the second quarter, and the economists do not expect quarterly GDP growth to dip too far below a seasonally adjusted annual rate of 1.0%; the economy would continue to grow throughout 2023 and into 2024, but the pace of the growth would be moderate.
Meanwhile, the report notes the economy has remained resilient over the past year as consumers continue to spend, and despite business leaders’ earlier warnings of an imminent recession, businesses have continued investing.