A new survey of economists found that respondents expect the US Federal Reserve to make little progress this year on curbing rising prices, saying they expect inflation and interest rates will remain stubbornly high.
The survey of 45 economists, which was conducted by the National Association for Business Economics (NABE), estimates that inflation will average 4.2% this year — a jump from the 3.9% the group predicted in February.
The survey indicates the economists expect the Federal Reserve to keep its benchmark interest rate around 5.1% this year, which is its highest level in 16 years.
NABE President Julia Coronado explained in a statement that respondents were “divided as to whether a recession in the US is likely in the next year.”
“However, the median forecast calls for economic growth through 2024 to be modest,” she noted.
“On balance, the panel expects higher interest rates in 2023 than forecasted in the February 2023 Outlook Survey,” Coronado added, noting: “interest rates are expected to decline and inflation is expected to slow in 2024, while job growth is anticipated to moderate, and the unemployment rate to rise.”
“Most respondents indicate the banking crisis is contained but ongoing, with only about one-fifth believing it will worsen,” NABE Outlook Survey Chairwoman Dana M. Peterson insisted.
“A majority of panelists believes breaching the debt ceiling will not bring on a global financial crisis unless an impasse persists for several weeks,” she claimed, before insisting that “most respondents believe de-dollarization is not a threat over the foreseeable future.”
But the US economy isn’t exactly out of the woods.
On average, the experts anticipate the American economy will grow by a paltry 1.2% this year, with three out of five economists responding that the US population should expect to see a recession by year’s end.
The survey comes as Republican House Speaker Kevin McCarthy (R-CA) and US President Joe Biden continue negotiations to head off a potential default on June 1 by raising the country’s debt ceiling once again. The US is currently running on extraordinary measures implemented by the Treasury Department in January.