The United States economy will enter a recession by 2023 at the same time that the Federal Reserve (Fed) increases its efforts to contain the highest inflation in the last 40 years (8.6% per year), 70% of the expert economists who were surveyed by the Financial Times newspaper.
The survey was conducted in conjunction with the University of Chicago Business School, which points out that new headwinds are emerging for the world’s largest economy, after one of the fastest rebounds in history after the pandemic by Covid-19.
The data from the Financial Times was published in the framework of the monetary policy meeting that the Fed will have starting today and where a continuation of the increase in interest rates is expected until September, depending on the inflation data that emerges.
The central bank has raised its interest rate since March by 75 basis points.
In addition, the president of the Fed, Jerome Powell, admitted in recent months that the fight against inflation could cause some “pain” in the US population, in addition to increasing unemployment a little.
Several of the economists who participated in the survey expressed concern about the economic outlook and predicted that core inflation, which excludes energy and food prices, will exceed 3% next year.
“This is not landing a plane on a normal runway. This is landing a plane on a tightrope, and the winds are blowing,” Tara Sinclair, an economist at George Washington University, told the Financial Times.
Sinclair also mentioned that the idea of reducing revenues and spending enough for inflation to reach the Fed’s 2% target is unrealistic.
Christiane Baumeister, a professor at the University of Notre Dame, said the rate is likely to reach 4% in 2023.
Dean Croushore, a former Fed economist in Philadelphia, said the central bank would have to raise them to 5% and lamented that the Fed had waited too long to act. “It will always be difficult to bring inflation down once you let it out of the bottle,” he said.
Approximately 40% of those surveyed by the British newspaper affirmed that the National Bureau of Economic Research, the organization in charge of dictating the dates of recession in the United States, will declare one in the first and/or second quarter of the following year and 33% predict that It will be from the third.
Morgan Stanley sees 50% chance of recession
For his part, Morgan Stanley Chief Executive James Gorman believes there is about a 50% chance that the US economy will enter a recession, as part of his speech to a conference organized by his company.
Gorman noted that no one “can accurately predict where inflation will be a year from now.” However, if the United States were to slip into a recession, the crisis is unlikely to be “deep or prolonged,” he said.
The National Bureau of Economic Research, the organization in charge of dictating the recession dates, will declare one in the first or second quarter of 2023, 40% of the experts estimated.
