A survey of economists conducted by the National Association for Business Economics (NABE) from December 28 to January 9 found that the share of respondents who believe that the US economy will be able to avoid recession in the next 12 months has increased to about 91% compared with 79% in the last survey (in October).
Overall, the growing optimism is supported by recent data, including reports on retail sales, inflation and the consumer sentiment index, which rose in January to the highest level since the summer of 2021. Meanwhile, Fed policymakers have signaled that they are likely to cut interest rates this year, given the slowdown in inflation. According to the CME FedWatch Tool, markets see a 43.4% probability of a 25 basis point rate cut at the Fed meeting in March and a 84.6% probability of a rate cut in May.
NABE also said that about 63% of respondents reported no shortage of raw materials, compared with 46% in October, and just over 50% of respondents reported no shortage of labor, compared with 38% in October. In terms of business prospects, respondents indicated that higher interest rates, growing geopolitical instability and higher costs pose the greatest risks.