As a longtime member of the National Association of Business Economics, I look forward to their survey of members. Normally, I am satisfied with their conclusions but think their latest is overly-pessimistic. Nonetheless, here are some of their current thoughts:
- 82% think the economy is slowing . . . duh! Who are the other 18%?
- 57% think the probability of recession next year (2023) is over 50%.
- 23% think we will have a “soft landing”.
- Average monthly job gains will drop from 370 thousand this year to only 76 thousand next year.
- The rate of unemployment will rise from 3.7% to a peak of 5% before dropping to 4.5% by year-end.
- Wage growth will drop from 4.9% this year to 4.3%, which is surprising to me.
- Headline CPI will increase more modestly next year than this year.
- Only 17% think monetary lag is 6 months or less, while 43% think it is 6-12 months.
My biggest disagreement with NABE is that they see the Fed as too-aggressive. While it was slow to recognize inflationary pressures, they have certainly moved decisively since then. If they raise interest rates by 50 basis points next week, instead of 75, that will be a good indicator they will adjust as appropriate.
My biggest concern is that all this data is too U.S.-centric and ignores growing geopolitical risks from oil, Ukraine, Russia, and China. Our economy is strong enough to muddle-thru, but it will get weighted down by the rest of the world.