The 2023 Recession

Most economists questioned some widely followed surveys’ believe there will be a recession this year. Some business executives say the downturn has already started. This recession will have several similarities to most of those in the past and is unlikely to be as bad as The Great Recession.

A new PCW survey reflects views commonly held among CFOs as they make financial plans for 2023. “More than a third (35%) of CFOs consider recession a serious risk to their companies, and 71% think it’s likely that one will occur in the next 12 months — although the depth and length will likely be heavily influenced by inflationary pressures.” It is worth noting that the Federal Reserve believes it will need to keep rates high because inflation will be a problem well into the year.

Inflation will almost certainly undermine consumer spending. The CPI shows that there continue to be sharp increases in food and clothing. High interest rates will also make loans for more expensive items like cars more costly than they have been in years.

Among the most carefully followed surveys about the economy is done quarterly by Bloomberg. The most recent version of the research shows that among 38 economists, 70% think there will be a recession this year. One of the nation’s premier economists is even more pessimistic than this. Larry Summers of Harvard believes inflation will plague the country and the world well beyond this year. He says the only solution to its persistence is a sharp rise in unemployment, which will need to push the jobless rate to 6%. That means two million Americans would be put out of work.

Few economists share Summers’ immense reputation. Among them is Nouriel Roubini. He predicted many of the factors that triggered The Great Recession. He calls the upcoming period a “financial train wreck” that will be “deep and protracted.”

International Monetary Fund Managing Director Kristalina Georgieva is also among the pessimists most well-known to economists and world leaders. She recently commented to CBS, “We expect one-third of the world economy to be in recession.” Among the causes, she said, was a slowdown in the world’s huge economies, particularly the US and China.

Taken together, the comments from both surveys and prominent economists show there is very little dissent about trouble in 2023. The open questions are how long and how deep?

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