Decent Chunk of Market Watchers See Recession Next Year

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2023

That’s when a decent share of market experts think the U.S. economy will fall into its next recession, according to a new Deutsche Bank survey.

Thirty-six percent of more than 500 market professionals from around the world surveyed last week predicted the U.S. would have a recession sometime next year, while another 36% said it was likely in 2024, Deutsche Bank said in releasing the findings Tuesday. Both figures have grown since last month, when 31% and 29% of respondents answered 2023 and 2024, respectively. 

While the survey findings didn’t explain why market watchers are increasingly pessimistic about the economy, a number of factors could be at play. For one, with consumer inflation the highest in decades, the Federal Reserve plans to increase its benchmark interest rate at least three times this year to help reduce demand and in turn bring down prices. But some economists say more rate increases may be required, and that might tip the economy into recession

Rising inflation “could prompt them to act much more aggressively than currently forecast,” Diane Swonk, chief economist at Grant Thornton, warned about the Fed in a commentary last month. “The risk is that they panic and raise rates too rapidly as they chase inflation for the first time since the 1980s.”

The economic impact of COVID-19 and the omicron variant could also be a factor in the recession risk, though many economists have suggested there shouldn’t be long-term effects. Some lowered their forecasts for growth in gross domestic product in the first quarter—or said in the worst-case scenario, it would lead to a contraction.

Have a question, comment, or story to share? You can reach Medora at medoralee@thebalance.com.

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Sources
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Federal Reserve. “ Summary of Economic Projections - December 15, 2021.”

  2. Grant Thornton. “Groundhog Day: Variants and the Outlook for 2022.”

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