If the economy is going to be sucked into a pocket of negative quarterly growth, it's going to be now, warns one top economist.
"I think if we have a negative quarter of growth, it's likely to be the first quarter of the year because that will capture the price shock that is cascading through the economy and the hangover after the very strong finish of last year. I don't think we are going to have a recession," said RSM chief economist Joe Brusuelas on Yahoo Finance Live. "Right now, if you take a look at the data, it says 15% probability. If I use the yield curve, I can kick that up to about 1 in 3. So I really don't see it this year."
Amid soaring prices for food and gas and weakening consumer confidence that also reflects concerns on the Russia-Ukraine crisis, some economists on Wall Street have begun to mark down their economic projections.
Many are still hesitant to say the U.S. economy will enter a recession this year, but the risks are rising, most experts agree.
Goldman Sachs Chief Economist Jan Hatzius recently cut his 2022 U.S. GDP forecast to a growth rate of 1.75% from 2% previously. Consensus estimates are looking for a 2.7% increase.
"We now see the risk that the U.S. enters a recession during the next year as broadly in line with the 20-35% odds currently implied by models based on the slope of the yield curve," Hatzius said.
For his part, Brusuelas puts the odds of a recession at roughly 33%.
February's retail sales out Wednesday did little to quiet economic growth angst. U.S. retail sales decelerated more than expected in February, following an upwardly revised jump in January.
Retail sales rose 0.3% in February compared to January, the Commerce Department said. This came in below the 0.4% rise expected.
Brusuelas ultimately doesn't think negative growth in the first quarter is something investors are factoring in.
"I don't think it's quite priced into the market yet," the economist added.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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