Analysts Warn of Possible Recession in the US – El Financiero

Analysts Warn of Possible Recession in the US – El Financiero

Analysts have warned that the chances of the US economy entering a recession are increasing, given the expectation of a higher-than-expected increase in interest rates, due to mounting inflationary pressures.

According to data from Bloomberg, there is currently a 30 percent chance that the world’s largest economy will experience a recession. Two weeks ago, the probability was 25 percent, however, at the beginning of this year, there was only a 15 percent chance.

A survey conducted by the National Association for Business Economics (NABE) revealed that 53 percent of experts give the probability of a recession within the next 12 months.

Brian Dees, President Joe Biden’s chief economic adviser, acknowledged for the first time that there is a risk of the United States entering a recession, at a time when the country faces “serious global challenges”, inflationary pressures and instability. from the financial markets.

“There is no doubt that we are facing serious global challenges right now, inflation first among them, and it is hitting families hard. But there is also no doubt that the United States is in a better position than any other major country in the world to deal with inflation without giving up All the economic gains we’ve had, because of the strength of our recovery.” National Economic Council.

Asked about the State of the Union on CNN whether he ruled out a recession, Reese replied: “There are always risks, but we feel good about the standing of the United States, especially when you look at the global picture.”

Meanwhile, Lisa Chalet, chief investor and wealth manager at Morgan Stanley, noted in a recent report that sustained high inflation, a rapid shift toward tighter monetary policy, as well as the geopolitical context, have affected the growth outlook in the United States. So they see a 27 percent chance that a recession scenario will materialize this year. In March, they saw only a 5 percent chance.

In April, inflation in that country reached 8.3 percent, levels not seen since 1981, as the Federal Reserve raised the benchmark interest rate by 50 basis points, a situation not seen since 2000.

Shalit emphasized that this more restrictive language by the Federal Reserve, in addition to higher input prices, could dampen consumer demand, which would significantly reduce the economic outlook, leading the United States into a possible recession.

FocusEconomics analysts agreed that there is a 30% chance of the US entering a recession this year, the highest number since 2020, when the coronavirus pandemic began.

Impact in Mexico

Analysts agree that if the neighboring country to the north falls into a recession, Mexico will be affected. Alain Jaimes, an economic analyst at Signum Research, said Mexico maintains a close trade relationship with the United States, and a recession could affect us mainly because of the external sector.

“Because there is a slowdown in the US economy, exports, flows to Mexico, and potential remittances and investments may slow. Although services have reported better-than-expected dynamism, Mexico may see its potential growth limited without US support.

Jacobo Rodriguez, director of economic analysis at BW Capital, agreed that remittances and the manufacturing sector were an important driver of the Mexican economy, so the US downturn would affect it.

“Unfortunately, there are no domestic factors that compensate for the downturn in the external sector, so the recession in the United States will have a very negative impact on the domestic economy,” he noted.

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