A growing number of banks and economists are warning that the U.S. economy could be heading toward a recession in the next year, as financial markets take a hit amid an influx of "economic pessimism," The Washington Post reports.
Over just the past week, the Post notes, an ex-Goldman Sachs chief executive warned of the "very, very high risk of recession," while Wells Fargo CEO Charlie Scharf said there was "no question" a downturn is coming. Former Federal Reserve chair Ben Bernanke even brought up the dreaded prospect of stagflation, in which a slowing economy meets high inflation.
The remarks echo those made by Deutsche Bank back in April, when the bank's economists predicted that a "deep recession will be needed to bring inflation to heel."
"Recession risks are high — uncomfortably high — and rising," Mark Zandi, chief economist at Moody's Analytics, told the Post. "For the economy to navigate through without suffering a downturn, we need some very deft policymaking from the Fed and a bit of luck."
"We're traveling very close to the edge," he added.
Fortunately, Treasury Secretary Janet Yellen seems to think a so-called "soft landing" is still possible (albeit hard to navigate).
"I think it's conceivable there could be a soft landing. It requires both skill and luck ... I hope that's the case, but this is a very difficult economic situation," Yellen told reporters in Germany on Thursday, per the Post. "There's a lot going on ... It's not a straightforward matter."