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Recession Consensus Mounts: "Growth Recession" Views (1/4)

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Recession Consensus Mounts: "40+% Chance" Views (2/4)

US OUTLOOK/OPINION
USBulletMarketsFixed IncomeForeign Exchange

Some sell-side analysts are all but calling for a recession by the end of 2023, but couching their views by assigning a just-under-50% probability:

  • BofA: "We see roughly a 40% chance of a recession next year. Our worst fears around the Fed have been confirmed: they fell way behind the curve and are now playing a dangerous game of catch up. We look for GDP growth to slow to almost zero, inflation to settle at around 3% and the Fed to hike rates above 4%."
  • Goldman: "We now see a 30% probability of entering a recession over the next year (vs. 15% previously) and a 25% conditional probability of entering a recession in the second year if we avoid one in the first year, implying a 48% cumulative probability at a two-year horizon (vs. 35% previously)...With no major imbalances to unwind, a recession caused by moderate overtightening would most likely be shallow, though even shallower recessions have seen the unemployment rate rise by about 2.5pp on average. One additional concern this time is that the fiscal and monetary policy response might be more limited than usual."
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Some sell-side analysts are all but calling for a recession by the end of 2023, but couching their views by assigning a just-under-50% probability:

  • BofA: "We see roughly a 40% chance of a recession next year. Our worst fears around the Fed have been confirmed: they fell way behind the curve and are now playing a dangerous game of catch up. We look for GDP growth to slow to almost zero, inflation to settle at around 3% and the Fed to hike rates above 4%."
  • Goldman: "We now see a 30% probability of entering a recession over the next year (vs. 15% previously) and a 25% conditional probability of entering a recession in the second year if we avoid one in the first year, implying a 48% cumulative probability at a two-year horizon (vs. 35% previously)...With no major imbalances to unwind, a recession caused by moderate overtightening would most likely be shallow, though even shallower recessions have seen the unemployment rate rise by about 2.5pp on average. One additional concern this time is that the fiscal and monetary policy response might be more limited than usual."