More than two-thirds of economists at 23 large financial institutions are betting on a U.S. recession by 2023.
[Financial Channel/Comprehensive Report] The Wall Street Journal reported on Tuesday (4th) that among the 23 large financial institutions that directly do business with the Federal Reserve, more than two-thirds of economists bet that the U.S. will recession in 2020; two others forecast a recession in 2024.
The financial companies participating in the evaluation are a collection of trading companies and investment banks, including Barclays Bank, Bank of America, UBS and other companies.
"We expect global GDP growth to slow in 2023, with both the U.S. and the euro area in recession," economists at BNP Paribas wrote in a note titled "A Recession-Shifting 2023 Outlook."
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Most economists say the culprit is the Federal Reserve, which has been raising interest rates for the past year in an attempt to slow economic growth and curb inflation.
Although inflation has moderated recently, it is still well above the expected target.
The United States will raise interest rates seven times in 2022, pushing up the benchmark interest rate from the range of 0% to 0.25% to the current range of 4.25% to 4.50%, setting a new high in 15 years.
Officials said in December they planned to keep rates between 5% and 5.5% through 2023.
A majority of economists surveyed by The Wall Street Journal expect higher rates to push the unemployment rate above 5% from 3.7% in November 2022, still low by historical standards Millions of Americans will lose their jobs.
Most also expect the U.S. economy to contract in 2023.
While the economy is doing relatively well during the 2022 rate hike, with initial jobless claims remaining low, for example, economists still say the cooling effect of higher rates will be more pronounced in 2023.
U.S. interest rates remain well below historical levels, but are also at their highest level since the onset of the global financial crisis in 2008.
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