Following the 2024 recession, the economy is slated to improve, with rising trends anticipated for US GDP, US Industrial Production, and many individual industries and markets in 2025. This should continue through the rest of the 2020s, with the US economy rising at various rates during that time.
By April 2024, it is projected that there is probability of 68.22 percent that the United States will fall into another economic recession. This is an increase from the projection of the preceding month where the probability peaked at 57.77 percent.
If Australia enters a recession, many people will have a tough time, whether through job loss, home loss, or even just a struggle to pay the bills. Whole markets will tank or lose significant value and many businesses will likely go bankrupt.
Australia is moving closer towards a recession and its chances of experiencing one in the next year is sitting at around 50 per cent, according to economists.
By early 2024, with inflation falling convincingly toward the Fed's 2.0 percent target and the labor market softening, we expect the Fed to start cutting rates at a measured pace. We expect the pace of real GDP growth to top 2.0 percent again by the second half of 2024.
U.S. strategists expect a meaningful earnings recession of -16% for 2023 and a significant recovery in 2024.
The most closely watched recession indicator is saying a downturn won't happen for another two years. That's because the Treasury futures market suggests the yield curve inversion will last until 2026, Credit Suisse's Jonathan Golub said. Golub predicted a downturn to strike in August 2025 based on historical data.
Australia's GDP is expected to grow by 1.6 per cent in 2023, followed by 1.7 per cent in 2024. Despite the bleak outlook, Treasurer Jim Chalmers is confident Australia will avoid a recession.
Australia's 80 per cent recession risk
Research from the Reserve Bank estimates that Australia's risk of recession over this year and next could be as high as 80 per cent.
In mid 2022, the panel assigned a 20% probability of recession in the next two years, but by February of this year that figure had grown to 26%. Most recently, the IMF downgraded growth forecasts for Australia from 1.9% in 2023 to a more timid 1.6%.
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 may continue to be the lucky country and avoid a recession in 2023, but its global peers may not be so fortunate. Chief economist at Australian Retirement Trust Brian Parker says that Australia is relatively well placed to handle the economic turmoil.
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.
Preparing for a recession comes down to using strong economic times to your benefit. Focus on limiting your spending, forming a budget, building an emergency fund and eliminating high-interest debts.
The threat of a U.S. recession remains alive in 2023. The consensus estimate on the probability of a meaningful downturn in the American economy in the next 12 months is at 65%, according to Goldman Sachs Research. But our own economic analysis rates that probability much lower, at 35%.
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.
1991–1992: The early 1990s recession mainly resulted from Australia's efforts to address excess domestic demand, curb speculative behaviour in commercial property markets and reduce inflation.
Australia managed to avoid recession for more than 28 years, including through the Global Financial Crisis of 2007-2008. This represented the longest period of growth without a recession for a developed country since the System of National Accounts was established in 1953.
The Australian financial system remains strong and well placed to support economic activity. Australian banks are well regulated, well capitalised, profitable and highly liquid; they are in a strong position to continue lending to domestic households and businesses.
In a recession, interest rates will decrease, and a good loan deal will be more in reach. Some car manufacturers bring back special financing that can give you a remarkably low rate. During the recession, there are fewer car buyers as well.
The bottom line
Signs point to a recession in 2023, not just in the U.S. but globally, though many experts remain hopeful it will not be too severe. This is good news for everyone, as it could mean fewer people lose their jobs, and household financial impacts will be mild.
Businesses would lay off workers and inflation-weary Americans would slash spending. But the case for a 2023 US recession is crumbling for a simple reason: America's jobs market is way too strong. Hiring unexpectedly accelerated again last month, with employers adding an impressive 339,000 jobs in May.
A majority of economists forecast a recession for the U.S. in 2023 – 58 percent, according to a survey from the National Association for Business Economics (NABE) released earlier this week on March 27.