Recently I've seen two conflicting reports on the probability of a recession in 2024. In one, they cite that infrastructure spending has been spread out. Capital investments, such as needed for the CHIPS Act for semiconductor manufacturing, haven't started and waiting for inflation to stabilize. Perhaps waiting for supply chains to stabilize as well. Employment is still high. A key factor in keeping unemployment elevated is a lack of day care so one parent stays home or is limited to part-time work. Relative birth rates from five years ago to this year will determine if more parents re-enter the full-time work force than depart it.
Another (see figure below from Pitchbook) is predicting a recession in the first or second quarter of 2024, based on historical trends. Look closely at the chart. Really close. It plots a "smoothed" probability of a recession in the next 18 months. Note that when recessions occurred in the last 45 years, it was when the probability dropped. A recession did not occur at the peak probability nor 18 months after. A recession seems to appear within 12 months of the peak or longer. Now look at all the peaks above 40%, 50%, even 60%. There were seven/eight such peaks, and only 5 have recessions afterwards. That's an 60-70% accuracy rate.
Consumer spending is still strong and businesses may be struggling to provide all the goods/services we demand. Hence tight labor market and supply chain strains. Logistics firms are staffed below capacity needs. As long as demand keeps pushing, the economy will keep growing as all of us business leaders figure out creative ways to meet the demand.
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