(Natural News) Two-thirds of leading economists from the U.S.’s biggest financial institutions predict an economic recession in 2023, according to a survey by the Wall Street Journal (WSJ).
The survey that polled 23 principal economists alongside other pundits from Barclays, Bank of America, TD Securities and UBS Group outlined the warning signs of an incoming recession. Decreasing pandemic savings, a slumping housing market and tightening of lending rules were the red flags to watch out for, they said. (Related: THIS IS SERIOUS: Financial wizard Jamie Dimon predicts major recession coming to US thanks to worsening economy under Biden.)
Of the 23 respondents, only five – Credit Suisse, Goldman Sachs, HSBC Holdings, JPMorgan Chase and Morgan Stanley – believe a recession would not occur.
“Several historically reliable lead indicators are sending recession signals, but in our view, these measures are unable to correctly gauge recession risk in the current environment,” Jeremy Schwartz, senior U.S. economist at Credit Suisse said about the outlook for 2023.
However, the warning signs are already here.
Americans who managed to save during the Wuhan coronavirus (COVID-19) pandemic as a result of reduced spending and government stimulus checks are now being forced to dip into their savings. Higher prices have also hit different products from groceries to gas.
With savings being insufficient, families have had to rely on credit lines to afford their lifestyles. Between the second and third quarter of 2022, household borrowing grew by $351 billion for a total of $16.51 trillion – the fastest increase in 14 years.
High interest rates have hit the housing market hard, as mortgage rates continue to rise and home sales slide downhill. Banks have also considerably tightened their lending requirements.
Recession, inflation hike surely on the table for 2023
A separate survey conducted by Bloomberg from Dec. 12 to Dec. 16, 2022 showed a higher probability of an economic downturn for 2023. According to the results of the poll that surveyed 38 economists, there was a 70 percent chance of a downturn – up by five points from 65 percent in November 2022.
Given this grim outlook, investor Michael Burry of “The Big Short” fame issued a dark warning – a recession and another inflation hike are almost clear on the horizon for 2023. Burry rose to fame after successfully predicting and profiting from the 2008 housing crisis.
In a tweet on New Year’s Day, Burry wrote that while inflation has peaked, “it is not the last peak of this cycle.” He added that it will probably rise again as part of the same cycle once the economy slackens and the Federal Reserve slashes interest rates.
Consistently high inflation has driven the Fed to increase interest rates at the quickest pace since the 1980s. Policymakers had already approved seven consecutive rate hikes in 2022 alone.
But according to Federal Reserve Chairman Jerome Powell, the central bank has more work to do about its fight against inflation even though there are early signs of prices starting to cool off.
“The inflation data in October and November shows a welcome reduction,” he told reporters. “But it will take substantially more evidence to give confidence that inflation is on a sustained downward path.”
Moreover, officials also signified that economic growth would slow abruptly in 2023, and that unemployment would march considerably higher to a rate of 4.6 percent as rate increases bring the U.S. on the verge of a recession. The Fed anticipates the jobless rate to remain high in 2024 and 2025 as steeper rates continue to have a negative effect on the economy.
Watch this Fox Business report outlining how the U.S. has entered a technical recession.
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