The US economy is likely to have a recession when inflation is the highest in 40 years

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2022-07-19 01:03:43

The US central bank predicts a recession this year when inflation is the highest in 40 years.

The US economy is at risk of falling into a recession in 2022

Central Bank economists now predict a recession in the US this year. According to the report published on July 13, the bank explained: “Our previous baseline expectation for the US economy was a growth recession. But coincidentally, a number of forces have slowed the economic momentum more rapidly than we previously expected.” Analysts added:

We now forecast a slight recession in the US economy this year.

After taking into account factors such as inflation from food and energy prices, tighter financial conditions, and higher mortgage rates, Bank of America estimated in June that there was a 40% chance of that happening. US recession next year.

Economists now expect fourth-quarter US gross domestic product to fall 1.4% from a year earlier, before rising 1% in 2023.

Germany’s largest private bank – Deutsche Bank also forecast a short-term US recession. Or Japanese real estate giant Nomura says a “shallow” but five-quarter recession will begin in the last quarter of this year.

Analysts of the US Central Bank said:

Our projections suggest that inflation is generally in line with the Fed’s 2% requirement by the end of 2024.

They believe that the hottest inflation in four decades will force the Federal Reserve (Fed) to take drastic actions to control prices. The Fed raised interest rates by 75 basis points last month, the biggest move since 1994. Several Fed officials have signaled that another similar increase will be in place this July.

Meanwhile, the US Labor Department released a report on July 13 showing that the consumer price index (CPI) increased 9.1% from a year earlier, the largest annual increase since 1981.

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