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Because the recession is (still) the great uncertainty of 2024

2024 will begin with a doubt that the economic performance of 2023 was unable to resolve: will the recession come or not? The question refers above all to the fate of the world's greatest power, the USA.
If, in fact, the contraction is already expected in the Eurozone at the end of the year and the beginning of the next – with the ECB not having specifically predicted the recession but the macro indicators do not exclude it – for the American nation the prevailing estimate seems to be of a soft landing.
Analysts say the expected two-year US recession should be ruled out among the possible scenarios.
Everyone else, however, from companies to investors, is still bracing for a slowdown caused by weak consumer demand.
This divergence of expectations is reopening a strategic debate for the world economy: can the US really slip into even a slight recession in 2024? US Recession 2024: Why It's Still a Possibility Consensus forecasts from major banks, including Goldman Sachs, Morgan Stanley, UBS and Barclays, predict that global growth will be limited in 2024 by high interest rates, more expensive oil and a China weakened, but with low probability of recession.
A year ago, many banks instead predicted a recession in the United States.
Businesses look gloomier than last year.
Words companies use to describe demand include adjectives such as weak, sluggish, slow, lackluster, unstable, muted, limited, challenging, pressured and erratic, according to an analysis by Deutsche Bank.
Retailer Walmart said earlier this month that while it was surprised by consumers' resilience this year in the face of rising prices, behavior was changing and it was becoming cautious.
In its latest earnings transcript, the Dollar General chain said gross profit was down, interest expenses were up and it forecast that “customer spending may continue to be constrained as we approach 2024, especially in categories discretionary".
read also The United States is in the midst of a manufacturing recession Consumer goods giant Procter & Gamble struck a more optimistic note.
Andre Schulten, the company's chief financial officer, recently said that P&G managed to increase its share of volume and value in U.S.
markets in the latest quarter, noting that the consumer remains strong.
The question to be clarified in 2024 is whether the Federal Reserve will be able to avoid recession and at the same time contain inflation, without harming consumers.
After leaving markets in doubt for months, the Fed's most recent update shows that it recognizes the need for balance and that officials are sensitive to the risks of excessive policy tightening that could push the economy into a more rapid slowdown.
than necessary.
Several companies are already feeling this weakness.
“Consumption is starting to slow down a little bit and consumption-based companies, which is really almost all large companies at this point, are starting to talk about it,” said PGIM's McDonough.
The global asset manager has assets of $1.27 trillion.
Consumer spending has actually cooled, according to surveys from the Institute for Supply Management.
A November survey by the Conference Board showed that about two-thirds of consumers still perceive a recession as “somewhat likely” or “very likely” in 2024.
read also Europe without momentum sees recession.
The reason in these data Recession eludes certain predictions Indicators from manufacturing surveys, the inversion of the US yield curve and an exceptional fiscal spending plan, all pointed to a slowdown, or even a recession this year.
Reuters polls of economists through 2022 and mid-2023 consistently showed that the average probability of a U.S.
recession within a year was above 60%.
This probability is now closer to 45%.
Big banks predict a slowdown in the global economy in 2023, with a recession likely in the United States.
Forecasts for 2024 are still conservative.

Author: A.W.M.

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