Deutsche Bank predicts a major US recession next year

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2022-04-30 13:44:25

Deutsche Bank economists have warned that the US will suffer a major recession next year. However, several other major investment banks, including Goldman Sachs and JPMorgan, are less pessimistic about the future outlook of the US economy.

Big US recession coming, according to Deutsche Bank economists

Deutsche Bank predicted an even deeper recession than its previous forecast for the US economy in a report to clients, released on Tuesday.

The bank’s economists, including David Folkerts-Landau, chief economist and lead researcher, explained in the report why the upcoming recession will be worse than expected. They describe:

“We’re going to have a major recession, but our firm view is that the sooner and more aggressively the Fed acts, the less long-term damage will be done to the economy.”

The report explains that it will be a long time before inflation falls back to the Fed’s 2% target. The authors warn that the central bank is likely to engage in the most aggressive monetary tightening since the 1980s, which “will push the economy into a substantial recession by the end of next year. “.

However, some other major investment banks are less pessimistic than Deutsche Bank.

Goldman Sachs recently estimated there is a 35% chance of a recession over the next two years. While acknowledging that it will be difficult to reduce high inflation, Goldman economists wrote in a report Friday:

“We don’t need a recession but perhaps need to slow growth at a rate slightly below potential, a path that increases the risk of a recession.”

“Inflation should ease down from current levels and we do not expect a recession driven by rising interest rates,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note Monday.

Jacob Manoukian, JPMorgan’s head of investment strategy in the United States, said this month that a near-term recession is possible but highly unlikely. Meanwhile, Bank of America chief investment strategist Michael Hartnett earlier this month warned that a “recession shock” was coming.

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