Federal Economists Warn a Recession Is 'Plausible' in 2023 During the Fed's February meeting, economists cautioned that stocks and real estate prices could fall this year and inflation could persist into 2024.

By Madeline Garfinkle

The possibility of a looming recession has lingered over the past year as the housing market ebbs and flows, massive layoffs unfold, and inflation remains persistently high.

Now, economists at the Federal Reserve are warning that the U.S. could be heading into a recession in 2023.

Related: We Might Be Headed Toward a Recession, But a 'Bigger Catastrophe' Could Be on The Horizon

In a joint meeting held earlier this month by the Federal Open Market Committee and the Board of Governors of the Federal Reserve System, the organizations warned that a recession happening this year is "plausible."

Given the "sluggish growth" in private domestic spending and "tight financial conditions" this year, the economists said "the possibility of a recession sometime this year as a plausible alternative to the baseline," the Fed said.

In response to rampant inflation, the Fed has raised interest rates up to nearly 4.5% over the past year in attempts to curb the rising costs of virtually everything. Despite the economists' suggestions that reductions in consumer energy prices and food costs could slow the rate of inflation, they warned that prices could still remain high throughout the year and into 2024.

The organization also said that "the probability of the economy entering a recession in 2023 remained elevated" while noting the committees will remain vigilant and are prepared to "adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals," meaning the Fed could continue to raise interest rates if need be.

Related: Americans 'Reluctant' to Spend Big, New Fed Report Reveals — Here's What It Means

Madeline Garfinkle

Entrepreneur Staff

News Writer

Madeline Garfinkle is a News Writer at Entrepreneur.com. She is a graduate from Syracuse University, and received an MFA from Columbia University. 

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