A year ago most economists expected a recession. Now 91% say otherwise.

• A 91% majority of economists surveyed by NABE see a US recession as unlikely in the next 12 months.
• That's up from 79% in October and a sharp turnaround from a year ago.

The vast majority of economists see a recession as unlikely in the next year, according to the latest survey from the National Association of Business Economics.

New results out Monday showed 91% now assign a probability of 50% or less for a slowdown in the next 12 months.

That's up from 79% who responded in the same way in October and a sharp reversal from a year ago, when slightly more than half of respondents saw a recession as likely.

"The January 2024 Business Conditions Survey results suggest broad improvement, with respondents reporting rising sales, profit margins, and capital spending, while supply chains are improving," NABE President Ellen Zentner, chief US economist at Morgan Stanley, said in a statement.

Only 9% of respondents reported a recession being more likely than not, down from 18% in the previous survey.

The figures fall in line with the recent spike in consumer sentiment and softening inflation expectations for 2024. The University of Michigan's survey spiked in January to 78.8, the highest since July 2021, and up from 69.7 the month prior.

All this comes as markets expect the Federal Reserve to cut interest rates this year, which central bankers have also signaled. Policymakers raised interest rates 11 times in their 2022-2023 hiking cycle, bringing the benchmark rate from near 0% to the 5.25%-5.5% range.

Meanwhile, the Commerce Department last week said retail sales climbed more than expected in December, supporting the narrative that Americans indeed keep spending amid cooling prices.

While the bear case remains on the table, most of Wall Street has become optimistic for the new year in markets and the economy. Soft-landing calls have steadily become consensus, and a chorus of stock strategists expect new all-time highs for the main indexes.

To be sure, famed economist Campbell Harvey, whose pioneering research showed the predictive power of the inverted yield curve, said in a recent interview on the Forward Guidance podcast that he expects a slowdown in 2024. Since 1968, the recession indicator has gone eight for eight in preceding a recession.