NABE Outlook Survey

May 2022

NABE Panelists Boost Expectations for Inflation in 2022 and 2023; Majority Estimates Risk of Recession within 12 Months Exceeds 25%



The May 2022 NABE Outlook presents the consensus macroeconomic forecast of a panel of 53 professional forecasters. The survey, covering the outlook for 2022 and 2023, was conducted May 2-10, 2022. The NABE Outlook Survey originated in 1965, and is one of three surveys conducted by the National Association for Business Economics (NABE); the others are the NABE Business Conditions Survey and the NABE Economic Policy Survey. Founded in 1959, the National Association for Business Economics is the professional association for those who use economics in their work. NABE has over 2,900 members and 44 chapters nationwide. Yelena Shulyatyeva (chair), Bloomberg; Jack Kleinhenz, CBE, National Retail Federation; Brent Meyer, Federal Reserve Bank of Atlanta; Kathleen Navin, CBE, IHS Markit; Dana Peterson, The Conference Board; Sara Rutledge, StepStone Group; and Robert Rosener, Morgan Stanley, conducted the analysis of survey responses for this report. The views expressed in this report are those of the panelists, and do not necessarily represent the views of their affiliated companies or institutions. This report may be reproduced in whole or in part with appropriate citation to NABE.


SUMMARY: “NABE Outlook Survey panelists continue to ratchet up their expectations for inflation rates in both 2022 and 2023,” said NABE President David Altig, executive vice president and director of research, Federal Reserve Bank of Atlanta. “While the panel sees inflation peaking in 2022, projections for the core personal consumption price index have been revised upward by a full percentage point this year.”

“Seventy-seven percent of the panelists indicate the risks to U.S. economic growth are tilted to the downside this year, with monetary policy missteps representing the greatest downside risk,” added Survey Chair Yelena Shulyatyeva, senior U.S. economist, Bloomberg. “More than half of respondents estimate the odds of a recession within the next 12 months are greater than 25 percent.”




- NABE panelists have downgraded their estimates for economic growth, both in 2022 and 2023, with a majority (77%) believing risks in 2022 are tilted to the downside. The median forecast for inflation-adjusted gross domestic product (real GDP) for the fourth quarter (Q4) of 2022 is an increase of 1.8% from Q4 2021, compared to a median forecast of 2.9% in the February 2022 survey. Panelists also lowered their expectations for year-over-year growth in Q4 2023 to 2.1%, down from 2.3% in the February survey. The most significant downward revisions in both years are in consumer spending and net exports.

- Panelists’ views regarding the outlook for the U.S. economy are varied. The spreads between the most optimistic and most pessimistic estimates for GDP growth in 2022 and 2023 are wide. The difference between the median of the lowest five projections and the median of the highest five projections is 2.9 percentage points for 2022 and 2.5 percentage points for 2023.

More than half (53%) of respondents assign a more than 25% probability of a recession occurring within the next 12 months. An additional 40% of the panel suggest the probability is between 11% and 25%. Just over a quarter (27%) of panelists believe a recession will occur in the second half of 2023, while 25% expect a recession either by the end of this year or in the first half of next year. One-third of panelists suggests a recession will not occur until 2024 or later.


- Monthly nonfarm payrolls in 2022 are forecasted to increase by an average of 363,000, up from the 317,000 anticipated in the February 2022 survey. However, the quarterly median forecasts imply that the largest monthly employment gains have already occurred. After payrolls increased by a monthly average of 562,000 in Q1 2022, the panel’s median forecast calls for payrolls to increase by an average of 383,000 in Q2 2022, and then by less than 300,000 per month in the second half of 2022.

More than half (54%) of panelists consider the potential for a wage-price spiral a major risk to growth in 2022. In addition, 19% of panelists believe a wage-price spiral is already underway. Stronger wage growth is cited by 19% of panelists as an upside risk to economic growth.

Prices and Interest Rates

- The panel’s projections for both the total and core personal consumption expenditures (PCE) price indexes have been revised up sharply for 2022. The median forecast for Q4/Q4 2022 headline PCE inflation increased to 4.8%, up from 3.2% in the previous survey. Excluding food and energy prices, the core PCE price index is now expected to rise by 4.2% in 2022 (on a Q4/Q4 basis), compared to 3.2% just a quarter ago. Moreover, in the current survey, the median forecast for core PCE inflation remains ½ of a percentage point above the Federal Reserve Open Market Committee’s (FOMC) price-stability target of 2% by the end of 2023. More than three-quarters (77%) of the panel anticipate that core PCE inflation will remain above the FOMC’s price stability goal until 2024 or later.

- Respondents continue to ratchet up their inflation expectations for both 2022 and 2023. These upward revisions to the inflation outlook are occurring despite the majority (71%) of panelists indicating that the core personal consumption expenditure (PCE) inflation rate will have peaked on a year-over-year basis by the end of Q2 2022. Nearly 90% of panelists anticipate core year-over-year PCE inflation will peak by the end of 2022.