The Conference Board today projected a recession in the coming quarters, but the University of California Los Angeles Anderson Forecast reported the chances of a recession are less than 50% in the next 12 months.

“Economic activity will continue slowing more broadly throughout the US economy and is likely to contract,” said Ataman Ozyildirim, senior director, economics, at The Conference Board. “A major driver of this slowdown has been the Federal Reserve’s rapid tightening of monetary policy to counter inflationary pressures. The Conference Board projects a recession in the coming quarters.”

The Conference Board today reported its US Leading Economic Index declined for the sixth consecutive month. It fell in 0.3% in August and is now at a level of 116.2.

Ozyildirim also noted strength in the US labor market is expected to continue moderating.

On the other hand, according to the UCLA Anderson Forecast, the US economy will muddle along with below-trend growth and high inflation over the next 12 months, but no recession is forecast at this time. However, it said the possibility exists that persistent inflation and aggressive interest rate policy will lead to a “hard landing” of the economy, potentially precipitating a recession.

Chances of a US recession in the next 12 months are less than 50%, according to the UCLA Anderson Forecast.

“There is tremendous uncertainty about what will happen over the course of the next 12 months and through the end of our forecast horizon,” said Leo Feler, UCLA Anderson Forecast senior economist. “While we have not forecast a recession at this time, the risks to the US economy are asymmetric to the downside.”

On the upside, it cited a robust labor market, strong consumer spending, an easing of pandemic-related supply chain constraints, an increase in government defense spending because of geopolitical instability and the return of manufacturing to the US from overseas. It noted businesses have begun to “reshore” production or have chosen domestic expansion over expanding manufacturing capacity overseas in response to supply chain issues and increasing geopolitical uncertainty.

Still, the UCLA Anderson Forecast cited factors that could drive the economy into recession. They included persistent and broad-based inflation; the likelihood that the Federal Reserve will continue to raise interest rates aggressively, constraining consumer spending and business investment; consumer pessimism; a downturn in housing markets related to rising mortgage rates; worsening worldwide economic conditions; and potential labor unrest.

The UCLA Anderson consensus forecast is that the US economy will grow 1.5% on average this year, 0.3% in 2023 and 2.0% in 2024.

Growth in 2023 is not expected to pick up until the latter half of the year.

It does not expect core inflation to decrease during the next two years to the 2% level experienced before the pandemic.