Recession fears are easing as inflation cools and expectations rise that the Fed will soften its policy, survey shows

• The likelihood of the US slipping into recession has declined in the past three months, per a key survey.
• The latest survey by the National Association of Business Economics had 53% of respondents expecting a 2023 recession, down from 64% in October.

The likelihood that the US will slip into a recession — or is already in one — has diminished over the past three months as the companies up their bullishness on the state of the economy, a survey shows.

The latest Business Conditions Survey from the National Association for Business Economics (NABE) showed those who expect a recession this year declined to 53%, from 64% in October. Another 3% of respondents thought the US was already in a recession in January.

The results of the survey, composed of the opinions of 60 NABE members, suggest business confidence is picking up as price pressures ease in the world's largest economy.

"The panel suggests that inflation may be easing with the outlook for prices charged at its lowest reading since the October 2020 survey, overall," said Carlos Herrera, NABE Business Conditions Survey chair and chief economist at Coca-Cola North America.

"Materials costs have drifted down significantly since last July, and more respondents expect falling costs in the next three months."

The sentiment boost offers some relief to a wave of pessimism that engulfed Wall Street at the end of last year, with banks from Bank of America to Morgan Stanley predicting stocks to crash more than 20% over 2023 as a result of interest-rate increases and a widely anticipated recession.

Indeed, it appears those surveyed are still pegging their expectations to the Federal Reserve's rate decisions over the coming months.

The Fed has sought to soften its hawkish language in recent weeks, having lifted benchmark borrowing costs by more than 400 basis points since last March, although it hasn't indicated any scope for rates to move lower in the foreseeable future.

Wharton professor Jeremy Siegel has urged the Fed to immediately halt its rate rises to protect the economy.