Economists
According to a recent Wall Street Journal quarterly survey of professional economists, the economic outlook has brightened since the last quarter, with experts now projecting lower odds of a recession, stronger job growth, and cooler inflation. This shift reflects improved sentiment bolstered by stabilizing trade conditions and resilient labor markets.
1. Recession Risk Falls Sharply
Economists significantly reduced their recession probability estimates. Over the past quarter, concerns fueled by threats of heightened tariffs have subsided, leading forecasters to report a more modest chance of a downturn . Where worries once hovered around one-in-three, today’s projections are notably more optimistic, suggesting only a mild risk on the horizon.
2. Labor Market Outlook Strengthens
The survey indicates economists now forecast average monthly job growth of approximately 55,000 over the next year. Although this is lower than the 134,000 projected in the previous quarter, it remains a positive signal for employment. The pace suggests gradual slowing, not collapse, preserving a healthy labor market overall.
3. Inflation Expectations Ease
Economists also report an expectation of cooler inflation, a welcome development following recent central bank tightening cycles. With inflation trends moderating, pressure on household budgets and business costs may ease — reinforcing confidence in the economic outlook
4. Tariff Threats Recede
A primary driver behind the previous survey’s pessimism was the risk of sweeping tariffs on major trade partners. Since then, those tensions have notably cooled, leading economists to conclude that the economic fallout may be less severe than feared Political Wire. This reprieve appears pivotal in improving growth and recession forecasts.
5. Mixed but Moderated Growth Path
Overall GDP growth forecasts remain modest but steady. While economists anticipate continued economic expansion—without explosive growth—the deceleration is gradual and controlled. The outlook suggests a sluggish yet steady rise, not the sharp declines often associated with recessionary cycles.
📊 Summary Table
| Indicator | Current Forecast | Previous Quarter |
|---|---|---|
| Recession Risk | Significantly Lower | Elevated (1-in-3 odds) |
| Monthly Job Growth | ~55,000 jobs | ~134,000 jobs |
| Inflation Outlook | Cooling | Warmer |
| GDP Growth | Modest & steady | Slower, below trend |
📌 Broader Context and Implications
- Labor Resilience: Even with slower job creation, the market remains resilient. Forecasts suggest that continued gains, though smaller, will sustain low unemployment and prevent panic.
- Inflation Gains Traction: Expectations of cooler prices may guide the Federal Reserve toward more gradual interest-rate adjustments, reducing the risk of overtightening.
- Trade Developments: The drop in tariff anxieties underscores how geopolitical moves can swing economic forecasts. Stability in trade policy is proving critical.
🧠Key Risks and Watchpoints
- Geopolitical volatility: Trade tensions or international disruptions could reignite concerns and steer forecasts darker.
- Labor data surprises: Unexpected dips in hiring or unemployment could tilt the outlook toward recession fears.
- Inflation persistence: Should inflation remain elevated, the Fed may need to maintain or increase rates, which could dampen growth.
✅ Final Word
The WSJ survey paints a cautiously optimistic picture: the threat of a recession seems less severe, employment continues to grow, and inflation is showing signs of abating. While not jubilation, the mood reflects a more balanced and stable economic outlook compared to three months ago. Economists appear to be gradually shifting from caution toward cautious confidence.
With labor and inflation expectations improving, the focus now turns to sustaining this momentum through stable policies and positive global conditions. Economic resilience is emerging, though much depends on avoiding shocks that could reverse the tide.