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Recession Consensus Mounts: Timing/Severity Vary (3/4)

US OUTLOOK/OPINION
Several analysts now have a U.S. recession as their baseline view. The timing and severity differ but the expected start ranges from late 2022 through mid/late 2023, with GDP dropping by between -0.5% to -1.0%. (For reference, the current 2023 Bloomberg consensus forecast is +1.9% GDP growth).
  • Deutsche:"Our baseline forecast now sees sub-1% growth in the first half of 2023 and the first quarter of negative growth occurring in Q3 2023, one quarter earlier than previously. The upshot is that the economy is likely to contract next year by about 0.5%. A more severe downturn leads to a higher unemployment rate, which peaks near 5.5%. The weaker labor market helps to guide inflation closer to target by 2024, though we still anticipate a nearly half percent overshoot at that point...A more severe tightening of financial conditions could easily pull forward recession risks to around the turn of the year, which could short-circuit the Fed’s tightening cycle."
  • Nomura: "With rapidly slowing growth momentum and a Fed committed to restoring price stability, we believe a mild recession starting in Q4 2022 is now more likely than not. ... We lowered our real GDP growth forecast in 2022 to 1.8% y-o-y, down from 2.5%. In 2023, we expect real GDP to decline 1.0% y-o-y, down from +1.3% (+0.6% Q4/Q4)."
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Several analysts now have a U.S. recession as their baseline view. The timing and severity differ but the expected start ranges from late 2022 through mid/late 2023, with GDP dropping by between -0.5% to -1.0%. (For reference, the current 2023 Bloomberg consensus forecast is +1.9% GDP growth).
  • Deutsche:"Our baseline forecast now sees sub-1% growth in the first half of 2023 and the first quarter of negative growth occurring in Q3 2023, one quarter earlier than previously. The upshot is that the economy is likely to contract next year by about 0.5%. A more severe downturn leads to a higher unemployment rate, which peaks near 5.5%. The weaker labor market helps to guide inflation closer to target by 2024, though we still anticipate a nearly half percent overshoot at that point...A more severe tightening of financial conditions could easily pull forward recession risks to around the turn of the year, which could short-circuit the Fed’s tightening cycle."
  • Nomura: "With rapidly slowing growth momentum and a Fed committed to restoring price stability, we believe a mild recession starting in Q4 2022 is now more likely than not. ... We lowered our real GDP growth forecast in 2022 to 1.8% y-o-y, down from 2.5%. In 2023, we expect real GDP to decline 1.0% y-o-y, down from +1.3% (+0.6% Q4/Q4)."