But neither the Reserve Bank nor the Labor government sees that occurring in Australia at this stage, even though the central bank has warned households it will do what its takes to get inflation under control.
Addressing an event in Sydney on Tuesday, RBA governor Philip Lowe said a recession was not on his horizon, pointing to low unemployment, strong household budgets and the highest terms of trade ever.
"But if the last two years has taught us anything, you can't rule anything out," he told the American Chamber of Commerce in Australia.
Treasurer Jim Chalmers also said a recession is not on the government's radar, but conceded there is a need to navigate difficult circumstances at the moment.
Business too is hopeful that a downturn can be avoided so soon after the 2020 COVID-19 pandemic.
"I think there's some distance from that," Australian Chamber of Commerce and Industry chief executive Andrew McKellar told reporters in Canberra.
"(But) we're living in an economy where supply constraints are very real and where inflationary pressures are growing."
The latest Westpac-Melbourne Institute leading index for May may give some clues to Australia's economic growth path over the rest of the year.
The index - a guide for the economic outlook over the next three to nine months - has been predicting the economy growing just above its long-term trend which is put at around 2.8 per cent annually.
However, the index has been easing and Westpac economists expect a further moderation in May with some its components, including the ASX shares index, consumer confidence and dwelling approvals, in decline.
But commodity prices are holding relatively well in Australian dollar terms.
The RBA board has raised the cash rate at its past two monthly meetings by a total of 75 basis points, the latter being a 50 basis point increase and the largest rise since February 2000.
Economists predict another 50 basis point rise in July, which would take the cash rate to 1.35 per cent, with the central bank now predicting inflation rising to seven per cent by the end of year rather than six per cent.
The minutes of the June board meeting, also released on Tuesday, show the options of a 25 or 50 basis point increase were discussed, with the latter chosen in the face of a bigger rise in inflation than earlier predicted.
"I would expect we will have the same discussion again at the next meeting (in July)," Dr Lowe said.