The US economy is slowing down, but no recession is expected within the next two years, says the University of California Los Angeles Anderson Forecast for June. The outlook was released today. Though it foresaw no recession for now, it did point to economic impediments created by the Russia-Ukraine war, Covid lockdowns in China, supply chain constraints and inflation.

And while a recession is not expected, the risk of one has grown. The Fed will likely increase interest rates this year significantly, slowing consumer demand and business investment.

Overall, the Anderson Forecast projects US economic growth to slow to 2.8% this year and further decelerate to 2.0% growth in 2023 and 1.9% in 2024.

“Only by the end of 2024 do we expect GDP growth to pick back up to trend rates,” said Leo Feler, UCLA Anderson Forecast senior economist and author of the June forecast.

The forecast also projects unemployment will rise in 2023 as the Federal Reserve increases interest rates and the economy slows.

Its projection for inflation does not see consumer prices easing anytime soon and calls for 7.4% year-over-year inflation, as measured by the consumer price index, by the end of 2022, falling to 2.2% by the end of 2023.

The Anderson Forecast doesn’t expect the Fed to bring core inflation down to its 2% target until after 2024.

Institute for Supply Management

Separately, the Institute for Supply Management reported economic activity in the manufacturing sector grew at a faster rate in May than in April. Its Manufacturing PMI for May reached a level of 56.1%, up from 55.4% in April. Readings above 50% indicate growth.

“The US manufacturing sector remains in a demand-driven, supply chain-constrained environment,” said Timothy Fiore, chair of the ISM’s Manufacturing Business Survey Committee.

However, hiring activity contracted. While a majority of ISM panelists taking part in the report said their companies are hiring, 30% cited difficulty filling positions in May, down from 34% in April. Still, employee turnover rates remained elevated.

“Employment levels, driven primarily by turnover and a smaller labor pool, remain the top issue affecting further output growth,” Fiore said.

Data in the report is based on a survey of purchasing and supply executives nationwide.