A recent survey by The Wall Street Journal indicates a reduced likelihood of a U.S. recession, alongside expectations of prolonged inflation. Conducted from July 3 to 8, the survey reflects a consensus among economists that the probability of recession has dropped to 33%, down from 45% in April. However, inflation expectations remain elevated, with the Consumer Price Index (CPI) projected at 3.04% for December 2025 and 2.58% for December 2026, remaining above the Federal Reserve’s 2% target. Current market pricing appears to reflect these findings, suggesting diminished odds of a Federal Reserve interest rate cut by September 2026.
The survey’s findings have influenced market expectations regarding the Federal Reserve’s monetary policy. In particular, the probability of a rate cut by the September 2026 meeting has decreased to 3.4% from 5% just 24 hours ago. This adjustment suggests that market participants view the persistent inflation expectations as a factor that could deter the Fed from easing monetary policy in the near term. The survey’s results appear consistent with the Fed maintaining a cautious approach, balancing the need to address inflation with the overall economic outlook.
