There are already several indicators that anticipate that the United States is heading into a recession, Deutsche Bank had indicated since the beginning of the month that it was a “slight” recession, but in the bank’s latest note for clients it has raised the tone pointing out that it is a “major recession”.
In their latest note, the bank’s economists warn that it is a more severe slowdown within the next two years, caused by the search for the Federal Reserve (Fed) to address the inflation that does not settle and that it intends to control with a series of increases in interest rates.
“We will have a great recession, but our firm opinion is that the sooner and the more aggressively the Fed acts, the less the long-term damage to the economy,” the analysts wrote in the financial report “Why the Coming Recession Will Be Worse Than Expected?”
The analysis indicates that although inflation could be touchingceiling, it will take quite some time before it goes back down to the Fed’s target of 2%, which means that the central bank will aggressively raise interest rates to the detriment of the economy.
“We believe that… it is very likely that the Fed will have to apply the brakes more firmly, and that a deep recession will be necessary to put inflation at bay”, the economists noted.
At the beginning of the month Deutsche Bank had anticipated a “mild” recession, but its diagnosis worsened as it is confirmed that the Fed will raise rates sharply.
The information from Deutsche Bank is released after the Bureau of Economic Analysis (BEA) announced this Thursday that the Gross Domestic Product (GDP) of the United States decreased at an annual rate 1.4% in the first quarter of 2022, after an increase of 6.9% in the fourth quarter 2021.
The decrease in GDP reflected decreases in private inventory investment, exports, federal government spending, and state and local government spending.
Bank of America (BofA) and Goldman Sachs have also touched on the issue of probability of a recession occurring in the next two years in the United States.
In the week Ken Hoexter, managing director of trucking research at BofA, noted that shippers are seeing rapidly weakening demand for trucks, as it has fallen for the fourth consecutive month to its lowest level low since June 2020.
Annually, the indicator has plummeted by 23%, which means that “(it is) close to the level of recession in freight transport,” warned the analyst, who assures that road transport is a fairly accurate indicator that shows how the economy of the United States and that is why it is considered a reliable reference, because when when people buy fewer products, companies ship less, and business activity slows down.
You may also be interested in:
– Low demand for truckers in the US: it would be a sign of recession
– 5 things you can do to prepare if the US enters a recession