Fence sitters
True to their reputation, economists are once again sitting on the fence. This time, the group is split on the chances of a recession, which until recently, was seen as pretty likely. Indeed, the Wall Street Journal’s latest quarterly poll found that top business and academic economists now put the chance of a US recession in the coming year at 48%, down from 54% in July.
The Federal Reserve will be pleased to see the number drop below 50:50, as the central bank has looked to curb inflation without triggering a full-blown recession — the near-mythical "soft landing".
A fine balance
The still-strong labor market and cooling inflation are winning most of the plaudits for this slightly more optimistic view — but there’s much that could still derail things. The surge in bond yields, and its effect on future government spending, is certainly high on the “worry list”, but nothing is as unpredictable as the ongoing Israel-Hamas war — with the threat of wider conflict in the region looming larger following a weekend of escalating clashes not only in Gaza, but on the Israel-Lebanon border.
