Associated Builders and Contractors Chief Economist Anirban Basu is maintaining his pessimistic outlook for the economy in 2024.
“I think the economy is going to get worse before it gets better,” Basu said, acknowledging that while his forecast of recession in 2023 may have been wrong, there remains concern ahead. “I'm predicting a recession, and bad things happen when recessions occur.”
His primary question is whether the Federal Reserve’s efforts in raising the rates will end in a recession or not. Basu maintains the answer is yes, despite being in the minority opinion.
Many other economists have forecast the Federal Reserve successfully managing to bring inflation down without dragging the economy into recession. Conflicting signals from numerous economic indicators give voice to the varied views on the status of the economy.
“I can tell you whatever you want to hear,” Basu quipped.
As for his general outlook, the ABC economist is still predicting a recession in the first half of 2024 that could end within the calendar year, bringing forth a more fruitful 2025. While acknowledging the economic successes of reduced material prices and overall economic growth, Basu contends there are still some reasons for concern.
He noted that monetary policy does not operate immediately, it operates in long and variable lags. His theory is that the economic improvement in the past 24 months has not been because of higher interest rates but rather the supply chain improvements.
