Topline
Some 47.5% of economists believe the economy is headed toward recession, according to a new Bloomberg survey released Friday, a 17.5% jump from last month as soaring inflation and widespread layoffs fuel recession fears.
Economists warn GDP will plummet to 1.3% in 2023, according to a Bloomberg survey released Friday. … [+]
Key Facts
Economists estimated second-quarter growth will shrink to 0.8%, down from optimistic estimates of 3% a month ago, according to a new Bloomberg survey of 34 economists conducted between July 8 and 14.
Not surprisingly, the survey — which was released two days after a Bureau of Labor Statistics report found year-over-year inflation hit a 40-year high when it spiked to 9.1% last month — marked a significant rise in the fear of recession, from 30% odds in June and 20% in March.
Economists estimated U.S. gross domestic product will average 2.1% through the end of the year — a 0.5% drop from the 2.6% predicted a month ago — while 2023 is expected to plummet to 1.3%.
The survey results come two days after Bank of America warned a “mild recession” could come as early as this year — the latest in a list of banks and financial institutions to forecast a recession.
Key Background
Deutsche Bank, Goldman Sachs, Moody’s Analytics and Japanese investment bank Nomura all predict a mild or severe recession, as inflation hits a 40-year high. Nomura warned one reason could be a perceived over-adjustment to inflation from the Federal Reserve, which raised interest rates last month by 75 basis points, the steepest hike in nearly 30 years. Last month, economists at S&P Global Ratings forecast a 2.4% drop in GDP by the end of 2022, a reversal from February forecasts of 2.4% growth.
Contra
Despite the warning signs, President Joe Biden is not convinced a recession is inevitable. Biden blamed the Covid-19 pandemic, rising gasoline prices and economic volatility as the reasons why Americans are feeling “really, really down,” in an interview with the Associated Press on Thursday, adding “we’re in a stronger position than any nation in the world to overcome this inflation.”
Big Number
20%. That’s the percentage of workers the New-York based non-fungible token (NFT) company OpenSea laid off on Wednesday over fears of “broad macroeconomic instability” and “prolonged downturn,” — the latest in a slew of mass-layoffs from U.S. companies ranging from tech, to auto rentals, banks and mortgage lenders. Some 244,000 people applied for unemployment benefits last week, an eight month high, according to a Department of Labor report released Thursday.
Further Reading
Bank Of America Becomes Latest Financial Institution To Forecast Recession (Forbes)
Odds of US Recession Within Next Year Near 50%, Survey Shows (Bloomberg)
Recession Fears Fuel Layoffs: Here Are The Major U.S. Ones So Far (Forbes)
Source: https://www.forbes.com/sites/brianbushard/2022/07/15/nearly-half-of-economists-believe-recession-is-coming-survey-finds/