Haters Gonna Hate - As if economists and their predictions haven't disappointed their parents enough already, now they want to make enemies out of everyone. According to a WSJ survey of 75 "expert economists," the odds of the US economy entering a recession over the next 12 months are mooning.
First, let's address the elephant in the room. Being a survey, this is one of the most garbage methods of data collection possible. Everyone knows the saying "garbage in, garbage out," and surveys, with their potential for inaccurate or dishonest answers, certainly fit that bill. They're better than nothing (usually), but just take it with about a million grains of salt.
It's not all doom and gloom, but it's certainly doomier and gloomier than I personally care for. On average, the 75 economists surveyed see the odds of the US entering a recession in the next 12 months as around 28%. That's up *bigly* from the 18% figure registered from this same survey in January and the 13% seen at this time last year.
Moreover, economists took an ax to their 2022 GDP growth projections. Last year at this time, the experts guessed that Q4'22 GDP would grow at an annualized rate of 3.6%. Now, that guesstimate has been slashed by nearly a third to 2.6%.
Doesn't sound great, but remember, we're not betting the house on these numbers or anything. I mean, the same survey has the participants predicting things like the closing 10-year yield and CPI all the way out to 2024. Odds are they're better off predicting the 2024 Super Bowl score, but we can still gain some insight on what this means for us now.
First of all, history shows that when bearishness increases, especially among the economic overlords, recessions do tend to become more likely. Bearishness is almost as contagious as C-19, so when these overlords say the end is near, that tends to spook other market participants and civilians alike and becomes a self-fulfilling prophecy. An example of how this might play out could be something like this:
Economists say scary times are coming → Market watchers spread the word until the average American hears it → Consumers get scared and decide they need to save more in preparation of a downturn → That decrease in spending leads to lower growth and eventually a recession.
Isn't economics fun? If that doesn't make total sense, just be aware that bearishness is becoming the new cool thing. Not to say that there isn't a reason for it, because there certainly is, but for the first time in a while, bullishness seems to be the contrarian take.
Keep those bananas safe, apes.