Forecasters see the U.S. economy continuing to cool in the current quarter before a further slowdown in consumer spending and pullback in business investment cause the economy to shrink in the second half of the year.
Gross domestic product is seen rising an annualized 0.5% in the second quarter, according to the latest Bloomberg monthly survey of 70 economists. While slightly better than the 0.2% rate expected a month ago, reflecting an upward adjustment in household spending to a still-weak 1%, the latest projection is less than half the first-quarter pace.
The chance of a recession over the next year held steady at 65%, according to 41 respondents. Forecasts for the Federal Reserve’s preferred price gauges inched higher, and economists now see a sharper decline in private investment in the second half of the year than previously projected.
“As firms struggle with higher financing costs and restricted credit in 2023, we expect reductions in capex and job cuts that will ultimately lead to a mild recession in the second half of the year,” said Luke Tilley, chief economist at Wilmington Trust.
The survey, conducted May 12-17, also showed economists still see the Fed staying on hold through the end of the year before cutting the benchmark lending rate in the first quarter of 2024.
2 thoughts on “U.S. economy headed for downturn in second half of 2023, forecasters say”
The economy headed in a downturn in January 2021. Don’t worry the current administration will just redefine “downturn”
and “slowdown” while telling us how great we have it now and any problems were caused by the prior administration.
They’ve beefing saying this since 2019.