Bloomberg is reporting that according to an economic model two of its analysts have devised, which examines 13 unspecified financial indicators, the US economy is now 100% likely to enter a recession in the next 12 months.
In the report the agency revealed that the model is predicting there is a 100% chance a recession will begin within12 months, a 73% chance it will begin within 11 months, and a 25% chance it will begin in ten months.
The model reflects a rapidly deteriorating economic situation, given the last time the model was run, it predicted a 65% chance of a recession within the year. The prognostication is considerably more gloomy than the predictions of the White House, where the President has insisted the US will manage to avoid a recession entirely, despite many experts recently concluding it will be unavoidable. President Biden has also predicted that if there is a recession, it would be “very slight.”
The model is gloomier than surveys of economists, who are not so certain the economy is doomed to recession. A recent survey of 42 major economists, said there was a 60% likelihood of a recession within the next 12 months. However it was noted that was a more pessimistic response than the previous survey, where they predicted there was a 50% chance the country would escape this downturn without entering a recession.
Another survey by the Wall Street Journal released on Monday found that there was a 63% likelihood of recession within the year in the US. It cited the sudden aggressive policy moves of the US Federal Reserve, which began hiking interest rates fast and hard after letting years pass by under loose monetary policy. More than half of the economists surveyed predicted that now the Fed would begin increasing rates beyond healthy levels, destabilizing the economy.
So far the Federal Reserve has proven unable to contain the rampant inflation within the US, even with an aggressive policy involving three consecutive 75 basis point rate hikes. In public statements policymakers have indicated their primary concern is stifling inflation, and they will continue the rate hikes until they see unmistakable progress on that front, even if the economy needs to be cooled to the point people feel some level of “pain.”
While President Biden has attempted to draw attention to the unusually strong job market, and insisted the nation’s economy is “strong as hell,” critics have pointed out his administration has added $3.37 trillion to the national debt. That spending comes on the heels of the over $7 trillion added during the previous administration, most of which was due to the various stimulus programs required to keep the economy from cratering as the nation locked down due to the COVID-19 pandemic. As a result, the national debt now sits at a record high of $31 trillion, as the dollar is strengthening due to tighter monetary policy, and the economy is heading toward recession.
