Although some economists from Deutsche Bank forecast a recession in the U.S. and say that it is impending others including Goldman Sachs and UBS Global Management do not believe in this gloom and doom scenario presented by the bank. The Fed is doing its bit by increasing interest rates in slow measures to ensure a soft landing but the bank is negative about this approach as well.
In a report on Friday evening, Goldman Sachs economists said that “we do not need a recession but we probably do need growth to slow to a somewhat below-potential pace.” They concluded that this path raised recession risks. The company also said that bringing down high inflation and wage growth would be extremely challenging but declared that a recession was “not inevitable.”
UBS Global Management
Although the Fed has got into an inflation fighting stance by slowly increasing interest rates over time, UBS Global Wealth Management has a hopeful outlook. It hopes that economic expansion will increase, although the fed is taking corrective measures.
On Monday, Mark Haefele, who is the chief investment officer at UBS, noted in a report that “inflation should ease from current levels, and we do not expect a recession from rising interest rates.”
Economists at Deutsche Bank had earlier painted a scenario where there would be a “mild recession.” On Tuesday, in a report to clients, Deutsche Bank economists wrote, “We will get a major recession.” However, they also mentioned that the economy would rebound by mid-2024 as they believe that the Fed will reverse its course in its fight against inflation.
According to Deutsche Bank the war in Ukraine and COVID lockdowns in China are developments that will contribute to a higher than expected inflation as disruptions in the supply-chain continue to grow.
No economist can completely predict a recession as so many factors come into play. Time will tell whether there is a slowdown, a mild recession or a major recession. However the gloom and doom predictors also say that the economy is bound to recover by 2024. So, even if there’s a recession, it will come to an end, later if not sooner.