There is a greater than 50% probability of a recession in 2023 for the US, according to economists taking part in the National Association for Business Economics’ “December 2022 “Outlook” report released today. Most expect the downturn to start in the first quarter of next year. NABE panelists also expect slower job growth, though they do not foresee a contraction in payrolls.

“The more subdued outlook coincides with materially higher expectations for interest rates at the end of this year and next,” said Dana Peterson, NABE Outlook survey chair and chief economist at The Conference Board. “Panelists expect job growth will slow over the first three quarters of 2023 but remain positive.”

Panelists’ median forecast for inflation-adjusted gross domestic product for the fourth quarter of 2021 to the fourth quarter of 2022 is 0.3%, little changed from the previous report. However, they lowered their expectations for real GDP growth to 0.3% between the fourth quarter of this year and the fourth quarter of 2023; in the previous report, they had forecast growth of 1.1%.

Nonfarm payroll growth is expected to weaken to an average monthly gain of just 76,000 in 2023 compared to 370,000 this year. In the previous month’s report, they had forecast average monthly gains of 94,000 for next year.

Panelists’ median forecast in today’s report called for slower job growth every quarter through the third quarter of 2023 — with a monthly average low of 50,000 gains in Q3 — to be followed by a recovery in the fourth quarter to a monthly average job gain of 75,000.

The US jobless rate is forecast to increase to 4.5% by the fourth quarter of 2023.

NABE’s survey included responses from 51 professional forecasters. It was conducted from Nov. 7 to Nov. 18.