In the pessimistic scenario, a broad loss in confidence and growing aversion to risk lead to drops in a wide range of investment and consumer spending categories to end the expansion in its 138th month, a new record. In this simulation, growth in business fixed investment is negative in 2020 and 2021 but jumps ahead of the baseline starting in 2022. Potential growth follows a similar trend. With demand weak, inflation, as measured by the four-quarter change in the core PCE price index, declines from around 1.8% in the second quarter of 2020 to 1.1% in the fourth quarter of 2023.
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