Recession? Maybe; Maybe Not

Wednesday, December 07, 2022

The December UCLA Anderson Forecast was unusual in that rather than make a firm prediction - recession or not - it provided two alternative scenarios, both heavily dependent on Federal Reserve policy. Excerpt from the official news release:

As 2022 draws to a close, the U.S. economy has reached a recession-related fork in the road. According to the UCLA Anderson Forecast, one path would lead to continued economic growth — although slower than the recent 2.4% growth rate — while the other would be a relatively mild, short-lived recession.

Despite dire predictions by some business leaders, the national economy has proved resilient as consumers continue to spend and businesses continue to invest. Whether the economy slips into a recession or doesn’t will depend largely on inflation stickiness and any additional actions the Federal Reserve takes to bring down inflation.

The important difference between the two scenarios is the decision of the Federal Reserve in setting monetary policy. In the coming months, the Federal Reserve will have to decide between two paths: continued aggressive tightening and moderation. The two forecast scenarios provide the likeliest outcome of each.

The economic outlook for California is similarly uncertain and, as with the national economy, the source of that uncertainty is national economic policy. The December forecast for the state — like the December U.S. forecast — consists of two scenarios. The difference between the state and the nation in both scenarios is that economic forces from sectors including construction, non–information technology fields and defense will lead the state to a more moderate outcome...

Full release at https://www.anderson.ucla.edu/news-and-events/press-releases/resilientus-economy-approaching-crossroads.

To hear the text above, click on the link below:

https://ia601402.us.archive.org/25/items/big-ten/dec%20forecast.mp3