Key Points

  • The National Association for Business Economics (NABE) said on Monday that, according to a survey of economists, the share of businesses currently passing on higher prices to consumers has fallen to its lowest level since January 2022, and recession risks have also receded since July.
  • Emily Kolinski Morris, chief economist at Ford Motor Company, said in a statement that the association's survey showed "panelists believe the probability of a recession has declined." "Although concerns about inflation are still affecting hiring and/or investment decisions at many businesses, the share of businesses passing on higher prices to consumers or expecting to do so in the next quarter has fallen to its lowest level since January 2022."
  • NABE said the proportion of firms reporting that they are passing some cost increases on to customers fell to 54% from 67% in the July survey. Selma Hepp, chief economist at CoreLogic, said during a NABE webcast that the decline "bodes well for inflation."

In-Depth Analysis

NABE said that, based on a survey conducted from October 3 to October 10, the unpredictable outcome of the November 5 election and its aftermath has not weakened investment and hiring plans at most companies and industries.

"The presidential election does not appear to be driving hiring or investment decisions for most panelists," said Hepp, chair of the NABE Business Conditions Survey.

Another survey that also noted the uncertain political outlook found executives less optimistic. A mid-September survey by PwC found that a majority of C-suite business leaders (71%) believe that post-election trade and tax policies will hurt U.S. competitiveness, regardless of which party wins next week's vote.

According to the PwC survey, about three-quarters (76%) of executives expect the election to result in a divided government, and three-fifths (61%) predict a recession in the next six months, up from 49% in June. The consulting firm surveyed 709 CFOs, CEOs, and other C-suite executives.

"Uncertainty is at historic highs," the National Federation of Independent Business (NFIB) said this month. NFIB said small U.S. businesses find it harder to predict the business climate over the next six months than at any time since the federation began measuring their outlook 38 years ago.

"Once the election results are announced, businesses will adjust their plans accordingly," NFIB said in its monthly survey report. "In a few weeks, the outlook for Main Street businesses will become clearer."

Politics has also affected U.S. households' economic expectations, according to a survey released by the University of Michigan on Friday.

Joanne Hsu, director of the university's Surveys of Consumers, said in a statement that the November 5 "election has a significant impact on consumer expectations." She noted that confidence among Democrats fell by 1%, while confidence among Republicans rose by 8%, suggesting they believe their candidate will win.

NABE said economists see recession, increased geopolitical instability, and higher-than-expected input costs as the biggest risks to the outlook.

The International Monetary Fund (IMF) last week downgraded its global growth forecast to 3.2% from 3.3% in July, citing regional conflicts and trade threats.

Meanwhile, the IMF raised its forecast for U.S. economic growth this year to 2.8% and to 2.2% for 2025, up 0.2 percentage points and 0.3 percentage points, respectively, from July forecasts.

NABE said the proportion of economists who believe their company is unlikely to lay off workers in the next six months rose to 19% from 10% in July.

NABE said more than half (56%) of economists put the probability of a recession over the next 12 months at 25% or lower.