https://sputnikglobe.com/20221018/fitch-projects-1990-style-mild-recession-in-us-by-spring-2023-report-says-1102016607.html
Fitch Projects 1990-Style Mild Recession in US by Spring 2023, Report Says
Fitch Projects 1990-Style Mild Recession in US by Spring 2023, Report Says
Sputnik International
WASHINGTON (Sputnik) - The American economy could land in a 1990-style mild recession by spring next year as unyielding inflation and the Federal Reserve’s... 18.10.2022, Sputnik International
2022-10-18T15:09+0000
2022-10-18T15:09+0000
2022-10-18T15:09+0000
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Fitch, in that report, slashed its US growth forecasts for 2023 and 2024, citing one of the most aggressive inflation-fighting campaigns in Fed history. US Gross Domestic Product is forecast to grow by 0.5% next year, versus its June forecast of 1.5%, Fitch said.High inflation will "prove too much of a drain" on household income next year and shrink consumer spending to the point it causes a downturn by the second quarter, Fitch added.The Fitch forecast comes on the heels of projections by Bloomberg economists on Monday that a US recession is effectively certain over the next year.Investors, economists and business leaders have warned for a while that the world’s largest economy was on the verge of a downturn — just 2.5 years after the last recession that broke out with the coronavirus pandemic in mid-2020.What is standing in favor of the US economy this time is a runaway jobs market. The labor market has been the juggernaut of the US economy, spearheading its recovery from the two-year long coronavirus pandemic.Joblessness among Americans reached an all-time high of 14.8% in April 2020, with the loss of some 20 million jobs after the COVID-19 breakout. Since then, the Labor Department’s non-farm payrolls report has reported hundreds of thousands of job additions every month. US average hourly earnings have risen without stop since June 2021.Inflation, as measured by the Consumer Price Index, stood at 8.2% for the year to September, not too far from the 40-year peak of 9.1% during the 12 months to June. The Fed’s target for inflation is a mere 2% a year and it has said it will not back off on interest rate hikes until it achieves its aim.Former economic adviser to the US government Larry Summers said in a blog post on Monday wage inflation will have to come down significantly if the Fed’s 2% target is to be attained. "I do not understand the basis for believing this is likely without a meaningful recession," Summers wrote.Since March, the Fed has raised rates by 300 basis points from an original base of just 25. The central bank intends to add another 125 basis points to rates before the year-end, with economists expecting further hikes in 2023.
https://sputnikglobe.com/20221012/sp-ratings-predicts-shallow-recession-in-us-if-global-woes-persist-1101781827.html
https://sputnikglobe.com/20221010/us-more-likely-than-not-to-slide-into-recession-within-18-months---ex-treasury-secretary-1101683060.html
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Fitch Projects 1990-Style Mild Recession in US by Spring 2023, Report Says
WASHINGTON (Sputnik) - The American economy could land in a 1990-style mild recession by spring next year as unyielding inflation and the Federal Reserve’s response of jumbo-sized interest rate hikes come to a head, CNN said Tuesday in a preview of a forthcoming Fitch Ratings report.
Fitch, in that report, slashed its US growth forecasts for 2023 and 2024, citing one of the most aggressive inflation-fighting campaigns in Fed history. US Gross Domestic Product is forecast to grow by 0.5% next year, versus its June forecast of 1.5%, Fitch said.
High inflation will "prove too much of a drain" on household income next year and shrink consumer spending to the point it causes a downturn by the second quarter, Fitch added.
The Fitch forecast comes on the heels of projections by Bloomberg economists on Monday that a
US recession is effectively certain over the next year.
12 October 2022, 19:00 GMT
Investors, economists and business leaders have warned for a while that the world’s largest economy was on the verge of a downturn — just 2.5 years after the last recession that broke out with the coronavirus pandemic in mid-2020.
What is standing in favor of the US economy this time is a runaway jobs market. The labor market has been the juggernaut of the US economy, spearheading its recovery from the two-year long coronavirus pandemic.
Joblessness among Americans reached an all-time high of 14.8% in April 2020, with the loss of some 20 million jobs after the COVID-19 breakout. Since then, the Labor Department’s non-farm payrolls report has reported hundreds of thousands of job additions every month. US average hourly earnings have risen without stop since June 2021.
10 October 2022, 13:07 GMT
Inflation, as measured by the Consumer Price Index,
stood at 8.2% for the year to September, not too far from the 40-year peak of 9.1% during the 12 months to June. The Fed’s target for inflation is a mere 2% a year and it has said it will not back off on interest rate hikes until it achieves its aim.
Former economic adviser to the US government Larry Summers said in a blog post on Monday wage inflation will have to come down significantly if the Fed’s 2% target is to be attained. "I do not understand the basis for believing this is likely without a meaningful recession," Summers wrote.
Since March, the Fed has raised rates by 300 basis points from an original base of just 25. The central bank intends to add another 125 basis points to rates before the year-end, with economists expecting further hikes in 2023.
