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Recessions

A recession is now likely in 2023. Here's what could trigger a sharp downturn in the economy

  • The economy appears to be on solid footing, with strong job growth.
  • But warnings signs are mounting.
  • Economists surveyed by Wolters Kluwer Blue Chip Economic Indicators say there’s a 54% chance of recession next year.

When it’s still sunny and mild, it’s tough to imagine a winter storm brewing in the distance.

But it’s probably coming.

The economy is still on seemingly sturdy footing. Job growth remains solid. Consumer and business spending have held up despite historically high inflation and sharply rising interest rates.

And yet there are mounting warning signs. Employment gains are slowing. Savings cushions are wearing thin. Price increases remain high and  corporate profits, which had stayed strong, appear to have softened, underscored by a bleak FedEx warning last week that contributed to a massive stock market sell-off.

Perhaps the darkest cloud over the economy, economists say, is that aggressive Federal Reserve interest rate hikes designed to tame inflation are likely to take a bigger toll on growth in the months ahead.

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