Chances of recession in the US are approaching 50%, according to survey

In March, those odds were just 20%. The latest survey was conducted from July 8 to 14 and 34 economists responded about the chances of a recession.

The Fed “has made it clear that it is prepared to sacrifice growth as it desperately tries to control inflation through higher interest rates,” said James Knightley, chief international economist at ING. “This is also contributing to the strongest dollar in 20 years, which will hurt international competitiveness.”

“In this environment, we see clear downside risks to consumer spending, while falling corporate profitability means companies are beginning to hunker down,” Knightley said.

Economists slashed estimates for second-quarter growth to an annualized rate of 0.8% from an average forecast of 3% in last month’s survey. Growth is estimated to be less than 2% in the second half of the year.

By 2022, gross domestic product (GDP) is expected to average 2.1%, down from the previous month’s 2.6% growth projection. In 2023, GDP is expected to grow an average of 1.3%.

Projections for the Fed’s key inflation metric, the personal consumption expenditures price index, or PCE, were raised for every quarter this year.

While most estimates were sent out before Wednesday’s release of June’s consumer price index report, PCE is now seen averaging 6.3% in the current quarter year over year. That’s 0.3 percentage point higher than last month’s estimate.

For all of next year, the PCE price index is expected to remain above the Fed’s 2% target.