A recession is feared to be easing as inflation eases and the job market tightens – but economists warn the likelihood of a recession in the next 12 months is still not high.

A recession is feared to be easing as inflation eases and the job market tightens - but economists warn the likelihood of a recession in the next 12 months is still not high.

Recession fears are receding as inflation cools and the job market strengthens – but economists warn the likelihood of a recession in the next 12 months is still not high.

Amid a brighter economic outlook, some experts now say it’s largely a matter of whether the U.S. economy is in recession or growing, according to a Bloomberg report.

Aichi Amemiya, senior economist at Nomura Securities International, told the outlet that he was sticking with his firm’s recession forecast, but added that it was ‘going to be a close call.’

Overall, Bloomberg’s July survey of economists revealed that forecasters still believe the U.S. will shift 60 percent into a recession over the next 12 months.

The report comes after a survey conducted by the Wall Street Journal last month found that economists believed a recession was 54 percent likely, down from 61 percent in the last two polls in April and January.

A recent Wall Street Journal survey of economists found that their average probability of a recession forecast in the next 12 months fell from 61 percent to 54 percent.

Aichi Amemiya, senior economist at Nomura Securities International, said it is ‘getting too close to call’ whether the US will fall into recession.

At the beginning of the year, many predicted that the United States could soon be hit with a recession due to rampant inflation and a flat economy.

At the time, major tech companies including Meta, Microsoft and Google laid off tens of thousands of workers to mitigate their skyrocketing prices and fighting bottom lines.

However, Doug Duncan, Fannie Mae’s chief economist, said predictions about a coming recession may be short-sighted due to a stronger-than-expected showing in housing starts and home prices.

The downside risk of a recession was also noted by Deutsche Bank Vice Chair for Research Peter Hooper, who said steep rate hikes from the Federal Reserve helped mitigate the potential for a crisis.

This rate increases anchored inflation to a level where it can be more accurately predicted in the long run, meaning that changes in price pressures cannot have the same impact on the economy.

According to a July survey, Bloomberg found that economists are gradually becoming more optimistic, as the latest CPI report showed that the inflation rate fell to a two-year low in June.

With the Fed expected to raise interest rates again next week, the inflation report led many to predict it would be the end of the current cycle.

The outlet also found that the private consumption expenditure price index, which is typically used by the Fed to monitor inflation, was expected to rise 2.2 percent in the last quarter of 2024 as the economic outlook brightened.

While several metrics show that the weak economy of the past few years may be turning around, one ominous indicator shows that the United States is already in recession.

The leading economic indicator, which measures future economic activity, has fallen for 15 straight months, with a further 0.7 percent drop in June.

The index marked its longest streak of decline since the months before the catastrophic recession of 2008 and 2009.

‘Taken together, June’s data suggest economic activity will continue to slow in the months ahead,’ said Justyna Zabinska-La Monika, senior manager of the Conference Board’s Business Cycle Indicators, which compiles leading economic indices.

“Higher prices, tighter monetary policy, harder access to credit, and reduced government spending will further dampen economic growth,” he told the World Economic Forum.

The development bolstered belief that the Fed could soon end its aggressive rate hikes, with Philip Marie, senior US strategist at RoboBank, predicting in response to Bloomberg’s July survey that the Fed is ‘likely to skip a September hike after a July hike.’

‘The next opportunity in November will likely take place against a backdrop of recession, as real rates become more constrained,’ he added.

The economy continued to add jobs at a strong rate in the first half of the year

Biden recently touted his policies as ‘Bidenomics’, taking credit for reducing inflation.

It comes after the latest Consumer Price Index report showed overall annual inflation at 3 percent in June, after last summer’s peak of 9.1 percent, a 12-month fall from a 40-year high.

The job market also remained stable, with the unemployment rate near a five-decade low of 3.6 percent in June, and the number of employed workers increasing by 209,000 in the month.

President Joe Biden has faced a struggling economy for most of his tenure, with Republicans using his fiscal woes as a political weapon for years.

But with the outlook significantly improving in recent months, the Democrat could turn a weakness into a strength as he begins his 2024 re-election campaign.

Biden has recently referred to his policies as ‘Bidenomics’, taking credit for the drop in inflation in a recent statement, saying, ‘Good jobs and lower costs – that’s what Bidenomics is all about.’

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