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Global Outlook: will the US economy avoid a recession?

In EIU’s latest global outlook video, global forecasting director Agathe Demarais, and global economist Cailin Birch, discuss potential triggers for a US recession, amid slowing growth and record-high inflation in America.

EIU forecasts that the US economy will narrowly avoid a technical recession in 2023-24. There are a few reasons for this, including a strong rise in household net wealth in 2020-21, a record-low unemployment rate, and fast wage growth. 

Despite this seemingly solid economic base, the risk of a recession has risen sharply since Russia’s invasion of Ukraine. Another spike in inflation, an overly aggressive Fed, or a collapse in asset prices are three of the main risks that could push the economy from stasis into an outright recession.

“The most salient of these risks is an overly aggressive Fed. The Fed must walk a very fine line, raising interest rates fast enough to cool demand growth and contain inflation expectations, without causing a contraction in consumer spending.”

cailin birch, global economist, EIU.

Find out more about the country’s political and economic outlook in EIU Viewpoint, our new analysis service. EIU Viewpoint provides unmatched global insights for nearly 200 countries, six industries and 25 critical commodities, helping organisations identify prospective opportunities and potential risks.