A Major Bank Is Now Forecasting a Recession Will Hit the US
Banks, traders and economists have been watching the economy — along with just about anybody with a paycheck — trying to anticipate if and when a recession might hit the U.S. Now, the first major bank has stepped…
Banks, traders and economists have been watching the 💰Economy — along with just about anybody with a paycheck — trying to anticipate if and when a 📉Recession might hit the U.S.
Now, the first major bank has stepped forward to say that a 📉Recession is no longer a question of “if” but “when.”
Deutsche Bank has warned that the 🏦Federal Reserve’s measures to 🥊Fight📈Inflation in the U.S. will spark a 📉Recession that will likely begin late next year, CNN
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A Major Bank Is Now Forecasting a Recession Will Hit the US — IJR
reported.
This is the first major bank to step forward and confidently predict a 📉Recession.
“We no longer see the Fed achieving a soft landing. Instead, we anticipate that a more aggressive tightening of monetary policy will push the 💰Economy into a 📉Recession,” Deutsche Bank economists, led by Matthew Luzzetti, wrote in the report.
With the surge of 📈Inflation and the hike in interest rates that the Fed announced, Deutsche’s economists are predicting that the 💰Economy will take a “major hit from the extra 🏦Federal Reserve tightening by late next year and early 2024,” Forbes reported.
The bank also predicted “two negative quarters of growth and a more than 1.5% rise in the U.S. 📉Unemployment rate.”
While Deutsche has indicated that they believe the 📉Recession will be “moderate,” there are also serious concerns about stagflation, a condition in which 📈Inflation and 📉Unemployment are high and demand is stagnant.
The concern about stagflation is not new, since 📈Inflation recently hit a record 7.9 percent — a figure not seen since the 1980s, Trading Economics reported.
Moody’s Analytics chief economist, Mark Zandi, said that the risks of 📉Recession and stagflation are “uncomfortably high,” Forbes reported.
Analysts have pointed to the 🇷🇺Russia-🇺🇦Ukraine⚔️War as a contributor to the financial chaos, but many are also blaming the Fed.
The former president of the 🏦Federal Reserve Bank of 🗽New York, economist William Dudley, said that a 📉Recession is “virtually inevitable” and that the central bank is too far “behind the curve in controlling 📈Inflation” and the Fed remains too optimistic about the possibility of a soft landing.
Investment bank 💼Goldman Sachs also previously forecasted rough times ahead of the American 💰Economy, Reuters reported.
In March, 💼Goldman Sachs analysts found it necessary to actually downgrade their predictions for American economic growth in 2022.
This came after the surge in consumer prices (especially 🛢️Oil) in the aftermath of 🇷🇺Russia’s invasion of 🇺🇦Ukraine.
The investment bank cut its growth forecast from an expectation of 3.1 percent down to 2.9 percent.
But in March, 💼Goldman Sachs analysts were still predicting that the chance of a recession in the next year was only 20 to 35 percent, Reuters reported.
However, as things have continued on the trajectory of rising consumer prices, supply chain problems, 📈Inflation and rising interest rates, Deutsche was ready to predict an upcoming 📉Recession confidently.
But in good news, Deutsche foresaw only a “mild” 📉Recession, including 📉Unemployment above 5 percent in 2024, enough to warrant “considerable layoffs,” but far less than the 10 percent to 14.7 percent levels seen during the Great 📉Recession. They also predicted that the 📉Recession would allow 📈Inflation to get closer to the Fed’s 2 percent 🎯Target by 2025, 📺CNN reported.
