Recession risks are fading, business economists say, but political tensions pose threat to economy
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Just a quarter of business economists and analysts expect the United States to fall into recession this year. Any downturn would likely result from an external shock, such as a conflict involving China, rather than from domestic economic factors. Respondents to a National Association of Business Economics survey expect year-over-year inflation to exceed 2.5% through 2024. Inflation has fallen from a peak of 9.1% in June 2022 to 3.4% in December. The Fed has stopped raising rates and has signaled that it expects to reduce rates three times this year. However, a growing share of business forecasters worry that the Fed is keeping rates unnecessarily high. Respondents are concerned about the chances of a conflict between China and Taiwan, conflict in the Middle East driving oil prices above $90 a barrel, political instability in the United States before or after the Nov. 5 presidential election, and U.S. government finances. The most important objectives of government budget policy should be promoting medium- to long-term growth and reducing the federal deficit and debts.
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