A recession is now likely in 2023. Here's what could trigger a sharp downturn in the economy (2024)

FAQs

What will trigger 2023 recession? ›

2023 was a year in which many experts got a lot of things wrong about the U.S. economy. Many economists believed the Fed's battle to tame inflation with a succession of interest rate hikes would trigger high unemployment and a recession. Instead, inflation was cut in half.

As inflation has run hot, the Federal Reserve has raised interest rates. Typically, that dynamic has triggered a recession, defined as two consecutive quarters of negative gross domestic product growth. Some forecasts are optimistic that can still be avoided in 2024.

Recessions can be the result of a decline in external demand, especially in countries with strong export sectors. Adverse effects of recessions in large countries—such as Germany, Japan, and the United States—are rapidly felt by their regional trading partners, especially during globally synchronized recessions.

Another factor driving economists' 2023 predictions of a bad economy was the path of oil prices in 2022. For most of the year oil prices rose, partially due to the ongoing war in Ukraine.

Soft Landing Possible But Unlikely

Banks are tightening their credit standards and increasing their loan pricing over deposit costs, according to the Fed's latest Senior Loan Officer Opinion Survey. My judgment call remains that the recession will begin in the first half of 2024, or possibly late in 2023.

The state of the U.S. economy may be a chief concern among Americans, but 2023 wound up as a pretty good year for the macroenvironment. Spending remained high, markets posted big gains and the Federal Reserve's battle against inflation showed signs of cooling — without freezing.

ITR Economics is forecasting that a macroeconomic recession will begin in late 2023 and persist throughout 2024. Business leaders recently had to lead their companies through the recession during the COVID-19 pandemic, and some were even in leadership positions back in 2008, during the Great Recession.

Build up your emergency fund, pay off your high interest debt, do what you can to live within your means, diversify your investments, invest for the long term, be honest with yourself about your risk tolerance, and keep an eye on your credit score.

The research of the Federal Reserve Bank of New York, currently puts the probability of a U.S. recession before February 2025 at 58%, that's about as high as a forward-looking recession probability has been on this model since the 1980s.

December 2007–June 2009. Lasting from December 2007 to June 2009, this economic downturn was the longest since World War II. The Great Recession began in December 2007 and ended in June 2009, which makes it the longest recession since World War II.

What always sells during a recession? ›

What are the best selling products during a recession? Items like personal hygiene, household items, pet food, diapers, food and beverages, and cleaning products all sell well during an economic recession. These items are either used frequently or are required for consumers to live happy, healthy lives.

Avoid becoming a co-signer on a loan, taking out an adjustable-rate mortgage (ARM), or taking on new debt. Don't quit your job if you aren't prepared for a long search for a new one. If you own your own business, consider postponing spending on capital improvements and taking on new debt until the recovery has begun.

The bad news is that the US, euro area and UK economies are (at best) expected to suffer a period of economic stagnation this year. But all this gloom is overshadowing some happier news: according to most forecasts, we will avoid a global recession this year.

The New York Stock exchange (NYSE) at Wall Street, Jan. 31, 2024, in New York. A forward-looking measure of the U.S. economy continued to decline in January but importantly it is no longer signaling a recession in 2024, reflecting an economy outperforming expectations.

Simply put, it's the idea that the U.S. is currently suffering from an extended period of slow economic growth that no one is talking about. TikToks referencing the trend often compare the cost of common goods and services — housing, vehicles, etc. — in 2024 to that of the 1930s.

Morgan Stanley Research strategists think U.S. corporate earnings could decline 16% in 2023 but stage a comeback in 2024 and 2025.

Will the 2023 recession be worse than 2008? - Quora. The events of 2008 were too fast and tumultuous to bet on; but, according to CNN, Moody's and Goldman Sachs predict that 2023 won't see a thunderous crash like the one that sunk the global economy in 2008.