Leading indicators in the U.S. economy have fallen significantly, and the country may be on the verge of a short, shallow recession. That’s according to Dana Peterson, chief economist for The Conference Board, who made the comments during a media call on Thursday. Peterson explained that “our own leading economic indicators suggest that if we are going to have a recession, it’s probably starting right about now.”
Peterson also stated that although the jobless rate could rise to 4.5%, it would still leave the U.S. with a tight labor market, and the country’s gross domestic product (GDP) won’t be greatly impacted either. She added that “we’re not anticipating major declines in GDP growth – very modest.”
Despite the expectation of a short, shallow recession, the debate around the U.S. debt ceiling continues to be a major issue for the economy. Lori Murray, president of the Committee for Economic Development, the public policy center of The Conference Board, explained that “the reason why the debt ceiling debate is so important this year is because of the vulnerability of the U.S. economy and the global economies as far as recovering, dealing with inflation, inverting recessions, and also economic obviously, heading towards economic recovery and growth.”
The potential for the U.S. economy to fall into a recession has led to concerns about the impact of a failure to raise the debt ceiling. Congress has until March 18 to either raise or suspend the debt ceiling, which is the legal limit on the amount of money the U.S. government can borrow to fund its operations. The government will not be able to pay its bills or service its debts if the debt ceiling is not raised, which could have severe consequences for the economy.
Peterson also noted that the Federal Reserve is expected to continue to raise rates, with the possibility of two or three more quarter-point hikes. However, she said that any consideration of a rate cut was unlikely until early 2024.
The potential for a recession and the impact of the debt ceiling debate will be closely watched in the coming weeks as the U.S. economy continues to navigate a challenging period.
