Bank of America has forecast that the U.S. economy will enter recession this year. The bank’s economists said that “a combination of many forces are slowing the economy’s momentum more rapidly than previously expected.”
The U.S. economy is headed for recession this year, Bank of America said
Economists at Bank of America expect the U.S. to enter a recession this year. In a report released Wednesday, they explained. “Our earlier baseline outlook for the U.S. economy was characterized by a recession in growth. However, a number of forces have combined to slow the economy’s momentum more rapidly than we had previously anticipated.” The analyst added:
We now expect the U.S. economy to experience a mild recession this year.
Factors such as inflation due to food and energy prices, tighter monetary policy, and higher mortgage rates were taken into account. In June, Bank of America estimated the likelihood of a U.S. recession next year at 40%.
Economists now expect U.S. gross domestic product to decline 1.4% y/y in the fourth quarter, followed by a 1% increase in 2023.
Other banks predicting a U.S. recession in the near future include Deutsche Bank, which expects the U.S. economy to enter a recession next year. Nomura predicts a shallow but long recession lasting five quarters starting in the last quarter of this year.
Bank of America analysts note that.
Our forecast is for inflation to be roughly in line with the Fed’s mandate of 2% by the end of 2024.
We believe that the hottest inflation in 40 years will force the Federal Reserve to take extreme action to tame prices The Fed raised interest rates by 75 basis points last month, the single largest move since 1994. Several Fed officials have indicated that a rate hike of similar magnitude will occur in July.
Meanwhile, the Consumer Price Index (CPI) rose 9.1% year over year, the largest annual increase since 1981, according to a report released Wednesday by the US Labor Department.
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