Experts are anticipating a US recession that they believe is effectively certain to come in the next 12 months, roughly around October 2023, based on new Bloomberg Economics model projections.
Despite the report, United States President Joe Biden downplayed the possibility of such a situation. The latest recession probability models, made by Bloomberg economists Anna Wong and Eliza Winger, forecast a higher recession chance across all timeframes.
Possibilities of a Recession
The report showed a 12-month estimate of a downturn by October 2023 hitting 100%, which is an increase from 65% for the comparable period in the previous update. It comes as Biden repeatedly said that the US will be able to avoid a recession and noted that any downturn would be "very slight."
The Democratic president made the statements as he seeks to reassure Americans that the US economy is on solid ground under his administration. However, tightening financial conditions, persistent inflation, and expectations of a hawkish Federal Reserve moving forward with rate hikes, are all increasing the threat of a contraction, as per Bloomberg.
The latest recession model is more certain than other forecasts and comes as a separate Bloomberg survey of 42 economists predicts the chances of a recession over the next 12 months is now at 60%, which is an increase from 50% seen last month.
Furthermore, the forecasts provide a sharp contrast to Biden's current optimistic outlook about the possibility of a recession. He has focused on strong job growth while continuing to campaign to assist Democrats to retain their House and Senate majorities in the upcoming midterm elections this November.
According to CNBC, when Biden reassured that there would be no recession, he noted that economists warn of one every now and then. The president's remarks were made during an interview that aired on Tuesday with CNN's Jake Tapper. The Democrat was referencing recent economic projections by major US banks.
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Rising Interest Rates
The president said that despite the multitude of warnings and forecasts, there has been no recession. The Democrat added that if there was a recession, it would be a very small one, saying, "we'll move down slightly."
On Monday, the CEO of JPMorgan Chase, Jamie Dimon, warned of the possibility of a recession in the next six to nine months. During an interview, he warned of a "very, very serious" mix of headwinds that could tip both the US and the global economy into recession by the middle of 2023.
Dimon's concerns come as in September, the US central bank raised benchmark interest rates by three-quarters of a percentage point, which was the Fed's third consecutive hike. While being optimistic, Biden did not completely rule out the chances of a recession but claimed that the possibilities were slim.
Concerns about continuously rising inflation and the increased chances of large interest rate hikes from the Federal Reserve have affected Wall Street again. They have sent long-term bond yields higher. Any while it may not last for very long, gas prices are yet again continuing to rise in the majority of the United States, CNN reported.
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