• According to a survey from the Wall Street Journal, two-thirds of financial institutions tied to the Federal Reserve predict a “shallow” or “mild” recession in the U.S. in 2023.
• Factors contributing to the potential recession include raising interest rates to fight inflation, pandemic savings being spent, a decline in the housing market, and banks having more rigid lending standards.
• Some financial institutions, such as Credit Suisse, Goldman Sachs, HSBC, JPMorgan Chase and Morgan Stanley, gave a more optimistic outlook and believe a recession will be avoided in both 2023 and 2024.
The U.S. economy could be in for a major shake-up in the coming months. According to data from a Wall Street Journal survey, two-thirds of financial institutions connected to the Federal Reserve are expecting a “shallow” or “mild” recession to take place in the U.S. in 2023.
The survey included major players in the financial services sector, such as Barclays, Bank of America, TD Securities, and UBS. The results showed that these institutions believe the Federal Reserve is the primary reason for the potential recession, as it has raised interest rates to fight inflation. At the time of writing, the inflation rate in the U.S. is 7%, compared with the Fed’s target desired rate of 2%.
In addition to the influence of the Federal Reserve, other factors may be contributing to the potential recession. These include pandemic savings being spent, a decline in the housing market, and banks having more rigid lending standards. The survey also found that many economists predict that unemployment in the country will rise from 3.7% in November 2022 to above 5%, along with a general economic contraction.
However, several financial institutions offered a more optimistic outlook on the situation, including Credit Suisse, Goldman Sachs, HSBC, JPMorgan Chase, and Morgan Stanley. These institutions believe that a recession will be avoided in both 2023 and 2024.
The state of the U.S. economy and its future predictions are uncertain. With the potential of a recession in the near future, it is important for people to remain informed and make wise decisions when it comes to their finances.