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"Experts: 50% Chance of Recession Still Looms in 2021"

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Recession Risk Remains at 50% in 2021, Say Economists

According to a recent survey by the National Association for Business Economics (NABE), a majority of business economists still believe there is a 50% chance of a recession in the U.S. economy within the next year. However, this is a significant decrease from the previous survey conducted in April, where 44% of respondents projected a greater than 50% chance of a recession. The new survey shows that about three-quarters of economists now believe the odds of a recession are 50% or less. The increased optimism among economists is largely due to rising sales and profits over the past three months. The survey indicates that businesses are experiencing higher sales compared to falling sales, and they are also more optimistic about future profits in the next three months. Additionally, material costs have been falling, which is a positive sign for businesses. Another positive development is that wages at firms remained unchanged during the second quarter for the first time since 2021. Rising wages have been a contributing factor to the inflation spike in the U.S., as businesses have been competing with each other to hire a limited number of workers. The stabilization of wages is seen as a positive sign for the economy. The survey also comes at a time when there are signs of cooling inflation. The consumer price index (CPI), which measures the price of everyday goods, rose only 0.2% in June from the previous month. On an annual basis, prices increased by 3%, the lowest level in two years. The slow decline in inflation, coupled with the resilience of the labor market, has fueled hope among some economists that the U.S. will be able to avoid a recession this year. Despite the positive indicators, there are still concerns about the possibility of a recession. The survey shows that about one-quarter of economists believe the likelihood of a downturn is 25% or less. This suggests that there is still a significant level of uncertainty in the economic outlook. It is worth noting that the survey was conducted between June 30 and July 12, and the economic landscape can change quickly. The ongoing COVID-19 pandemic, supply chain disruptions, and geopolitical tensions are all factors that could impact the economy and potentially increase the likelihood of a recession. In conclusion, while there is increased optimism among business economists about the U.S. economy, with a majority seeing a lower chance of a recession in the next year, there is still a level of uncertainty. The positive indicators, such as rising sales and profits, falling material costs, and stabilized wages, provide some hope for the economy. However, external factors and the ever-changing economic landscape can still impact the outlook. It will be important to closely monitor economic indicators and adapt to any changes in order to navigate these uncertain times.

Hot Take: Impact on Newly Formed LLCs and Business

The findings of the recent survey by the National Association for Business Economics (NABE) regarding the likelihood of a recession in the U.S. economy within the next year have important implications for newly formed LLCs and businesses. While the majority of economists now believe that the odds of a recession are 50% or less, there is still a significant level of uncertainty. For a newly formed business, the economic landscape plays a crucial role in shaping its prospects and growth trajectory. The increased optimism among economists, driven by rising sales and profits, falling material costs, and stabilized wages, offers a glimmer of hope. These positive indicators suggest that there may be favorable conditions conducive to establishing and expanding a new business. Lower material costs can be advantageous for a newly formed LLC, as decreased expenses can help enhance profit margins and provide more room for investment in product development or marketing efforts. Additionally, stabilized wages offer stability for businesses, reducing the risk of spiraling labor costs and contributing to a more predictable financial outlook. However, it is essential for new businesses to remain cautious due to the lingering possibility of a recession. Although the survey shows decreasing concerns about a downturn, approximately one-quarter of economists still perceive a likelihood of 25% or less. This underscores the importance of prudent financial management, strategic planning, and agile adaptation to navigate uncertain economic conditions. Newly formed LLCs should also closely monitor economic indicators and stay informed about external factors that can impact the economy, such as the ongoing COVID-19 pandemic, supply chain disruptions, and geopolitical tensions. These variables can influence market conditions and consumer behavior, thereby having an indirect effect on the prospects of a new business. In conclusion, while the survey presents a more optimistic outlook for the U.S. economy, the potential impact on a newly formed LLC or business should be approached with cautious optimism. The positive indicators provide some hope for growth opportunities, but the presence of uncertainty implies the need for resilience, adaptability, and a proactive approach to navigate the ever-changing economic landscape. Original Article First Published at: https://www.foxbusiness.com/economy/economists-still-see-chance-recession-year

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