The Click Times: On Tuesday Deutsche Bank became the first major Wall Street bank to forecast a recession for next year, albeit a “moderate” one, thanks to a combination of rising inflation and rising interest rates.
1. The company’s economists forecast that the U.S. economy can take a “major hit from additional Federal Reserve tightening in late next year and early 2024” whereas experiencing “two negative quarters of growth and a over 1.5% rise within the U.S. unemployment rate.”
2. As Russia continues its invasion of Ukraine, that has caused serious market volatility since February, “recession and stagflation are going to be serious threats,” says Mark Zandi, Moody’s Analytics chief economic expert, adding that the risks are “uncomfortably high.”
Analysts at Goldman Sachs warned in a similar note recently that the period of stagflation in the 1970s was the “clearest example” of the economic environment investors are facing today.
3. Some consultants have gone even further: Economist William Dudley, a former president of the Federal Reserve Bank of New York, last week known as a recession “virtually inevitable” because the central bank is “too behind in dominant inflation,” and Fed Chair Jerome Powell remains too optimistic about a soft landing.
4. Meanwhile, former Fed Governor Lawrence Lindsey said in an interview on Monday that the economy would slide into recession as quickly as this summer, with the central bank “nowhere near getting inflation under control”. What he predicts can force consumers to cut payment.
KEY QUOTE: An impending recession or stagflation “depends critically” on the Fed’s ability to boost interest rates fast enough to sufficiently slow economic growth and crush inflation, however “not so quick that growth and undermine recovery,” Zandi said. “It’s going to be tough.
CONS: whereas some forecasters are sounding the alarm, most still say a recession is unlikely next year, which should protect against a slowdown in economic process, say consultants.
SHOCKING FACT: Higher costs because of inflation are costing the average American household an extra $296 a month, according to a report by Moody’s Analytics last month.
–
Follow the click times on gab.
Tags: #US recession news #US recession 2023 #is recession coming in US #deutsche bank predicts recession
