Recession worries are likely to carry over into the second half of 2023.
Key Takeaways. U.S. strategists expect a meaningful earnings recession of -16% for 2023 and a significant recovery in 2024.
Vanguard economists wrote in their mid-year outlook that they see a high probability of recession, and the “odds have risen that it could be delayed from 2023 to 2024.” JPMorgan Chase economists said in a note last week that there could be a “synchronized global downturn sometime in 2024.”
Last week, federal treasurer Jim Chalmers reiterated that the government and Australia's central bank do not forecast a recession for Australia in 2023 or the next few years. However, the economy is only expected to grow at minimal levels through June 2025 (see table below).
U.S. ECONOMIC GROWTH QUICKENS IN Q2 2023
Gapen notes that the "mild recession" he and BofA are projecting is in line with the description of a soft landing.
If something's going to be painful, it's easier to bear if it's of short duration, at least in some contexts. Economic recessions generally follow that rule, but not always. A short, deep recession can leave a lot of scars, as the pandemic one did.
In a best-case scenario, the U.S. will likely see a 'soft landing' with low/slow growth across 2023 before picking up in 2024. However, a downside scenario is a real possibility and could see the U.S. enter a prolonged recession lasting well into 2024, as is currently forecast for the UK and Germany.
“A recession would likely entail a larger increase in the unemployment rate. However, given we are already expecting very weak growth, the difference is likely to be only marginal,” Coombs says. Oliver says a more traditional recession would involve the unemployment rate lifting by at least 2 percentage points.
The risk of recession here is now around 50%. ► Recession would mean higher unemployment, less job security & a likely further leg down in shares & home prices.
Economic growth is expected to slow this year
GDP growth is expected to slow to around 1¼ per cent over 2023, with GDP per capita declining over the year (Graph 5.4).
Will there be a recession in 2023? Most economists still expect a recession in the second half of the year. They say the Fed's high interest rates eventually will be felt more profoundly by consumers and businesses.
Stocks will hit a record high by the end of 2024 as the bull market that began in October rages on, veteran market watcher says. Traders work on the floor of the New York Stock Exchange. After a brutal 2022, the stock market's bulls are on parade this year.
A recession or economic downturn can be an unsettling time for investors and their finances. Stock prices often fall just as the economy starts to slow and workers get anxious about potentially losing their jobs due to the slowdown. But recessions can actually be one of the best times to invest.
Global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. While the forecast for 2023 is modestly higher than predicted in the April 2023 World Economic Outlook (WEO), it remains weak by historical standards.
In general, a recession lasts anywhere from six to 18 months. For example, the Great Recession that started in December 2007 lasted 18 months. But the recession prompted by the pandemic in 2020 only lasted two months. When a recession is on the horizon, it's impossible to know how long it will last.
You can keep money in a bank account during a recession and it will be safe through FDIC insurance. Up to $250,000 is secure in individual bank accounts and $500,000 is safe in joint bank accounts.
Recessions last 11 months on average. The last recession that Australia faced in the early 90s lasted from September 1990 to September 1991.
In technical terms, Australia avoided a recession because it did not experience two quarters of negative quarter on quarter headline GDP growth. But in terms of GDP per capita, the economic output per person, the economy actually had a recession.
Higher interest rates that often coincide with the early stages of a recession provide an advantage to savers, while lower interest rates moving out of a recession can benefit homebuyers. Investors may be able to find bargains on assets that have decreased in price during a recession.
Australia could face per-capita (if not actual) recession
The panel is forecasting Australian economic growth of just 1.2% in 2023 – the lowest rate outside a recession in more than 30 years, climbing to just 1.5% in the year to June 2024 and 2.3% in the year to June 2025.
Prices could fall further
If you buy in a recession, there is always the risk that prices could fall even further. That said, Australian property prices usually tend to rise in the long run, especially in capital cities. So if you're prepared to spend some time owning your property, you're likely to come out ahead.
Raymond James is predicting a 1.3% growth rate for 2023 and 0.6% for 2024 — which coincides with the firm's forecast for a “very, very mild recession,” Aleman said.