The crisis is already inevitable: 100% probability of a recession in the US

The crisis is already inevitable: 100% probability of a recession in the US

The probability that the United States will experience a recession in the next 12 months is already 100%, according to new forecasts from Bloomberg Economics models. It will be an economic blow to President Joe Biden’s plans Before the midterm elections which takes place in November.

The latest recession probability models by Bloomberg economists Anna Wong and Elisa Winger have projected a higher probability of a recession across all time frames, with 12 months estimating a recession by October 2023. up to 100% compared to 65% From the same period in the previous update.

The forecast will be bad news for Biden, who has repeatedly said that the United States will avoid a recession and that Any slowdown would be ‘very slight’, He is trying to reassure Americans that the economy is on solid foundations under his administration.

However, the tightening financial conditions, persistent inflation and expectations a Tough Federal Reserve Going forward with raising interest rates increases the risk of deflation.

The model shows more certainty about a recession than other forecasts. A separate Bloomberg survey of 42 economists predicts the potential for a recession in Next 12 months now 60%, up from 50% from the previous month.

The forecast contrasts sharply with Biden’s optimistic tone. The president has focused on strong job growth in his campaign to help Democrats They retain their majority in the House of Representatives And the Senate in elections to be held within three weeks.

But inflation, which has hovered near its highest level in four decades, hIt was a burden to prospects Democrats in elections in which opinion polls indicate that the economy is the main concern of voters.

The Bloomberg Economics model uses 13 macroeconomic and financial indicators to predict the probability of a recession over a one-month to two-year horizon. While the possibility of a recession within it 12 months at 100% According to the model, the odds of an urgent recession also increased. The model predicts that the probability of a recession 11 months from now will be 73%, up from 30%, and the probability of 10 months has risen to 25% from 0%.

According to Bloomberg Economics, the deterioration in the outlook is due to the general deterioration of the economic and financial indicators used in the model.

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