Economists Continue to Adjust Their Forecasts for Future Recessions

The Index of Leading Economic Indicators is designed to provide insight into the future direction of the economy. According to The Conference Board, this index fell in October, which suggests that a recession may be on the horizon.

Despite the fact that the index has been falling for 19 months, no recession has occurred yet. Recently, many economists have been updating their forecasts. Justyna Zabinska-La Monica at The Conference Board stated that they were previously predicting a recession earlier this year, but that timeframe has been shifted. She noted that consumer spending has remained stronger than expected, preventing a recession. However, she warned that this could change, particularly since student loan payments have resumed. She is still forecasting a recession early next year, but if it happens, it will likely be short due to several factors such as the stability of manufacturing, housing, declining inflation, and a relatively tight labor market.

On the other hand, U.S. economist Matthew Martin at Oxford Economics said he is no longer forecasting a recession as of this month. He explained that while he still sees unemployment increasing and labor conditions beginning to soften, he thinks the most likely chance is a soft landing now. However, he added that if the economic data keeps surprising him, he will have no problem updating his forecasts again.