Why Deutsche Bank is predicting a 'major' recession


Strap in, everyone — A big recession is coming, CNN reports, per a prediction from Deutsche Bank.
"We will get a major recession," economists at the bank told clients on Tuesday. They fear it will take a "long time" before inflation drops back down to the Federal Reserve's goal of 2 percent, despite the presumed peak happening now, suggesting the Fed might raise interest rates too high at the expense of the economy, CNN summarizes.
"We regard it … as highly likely that the Fed will have to step on the brakes even more firmly, and a deep recession will be needed to bring inflation to heel," the economists wrote in a report titled Why the coming recession will be worse than expected.
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Somewhat thankfully, the bank thinks the economy will rebound by mid-2024.
Notably, Deutsche's prediction is must more pessimistic "than most other major forecasters," Bloomberg notes (even the bank's economists have admitted so).
Goldman Sachs, for example, has stressed that recession is "not inevitable," though it will nonetheless be "very challenging" to slow rampant inflation and wage growth. And UBS agrees: "Inflation should ease from current levels, and we do not expect a recession from rising interest rates," Chief Investment Officer Mark Haefele wrote Monday, per Newsweek.
Bloomberg's model meanwhile estimates a 44 percent chance of recession before January 2024.
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Brigid Kennedy worked at The Week from 2021 to 2023 as a staff writer, junior editor and then story editor, with an interest in U.S. politics, the economy and the music industry.
-
5 educational cartoons about the Harvard pushback
Cartoons Artists take on academic freedom, institutional resistance, and more
By The Week US
-
One-pan black chickpeas with baharat and orange recipe
The Week Recommends This one-pan dish offers bold flavours, low effort and minimum clean up
By The Week UK
-
Merz's coalition deal: a 'betrayal' of Germany?
Talking Point With liberalism, freedom and democracy under threat globally, it's a time for 'giants' – but this is a 'coalition of the timid'
By The Week UK
-
How will Wall Street react to the Trump-Powell showdown?
Today's Big Question 'Market turmoil' seems likely
By Joel Mathis, The Week US
-
Markets notch worst quarter in years as new tariffs loom
Speed Read The S&P 500 is on track for its worst month since 2022 as investors brace for Trump's tariffs
By Peter Weber, The Week US
-
Tesla Cybertrucks recalled over dislodging panels
Speed Read Almost every Cybertruck in the US has been recalled over a stainless steel panel that could fall off
By Justin Klawans, The Week US
-
How will the Fed manage Trump's economy?
Today's Big Question Jerome Powell is 'in a bind'
By Joel Mathis, The Week US
-
Crafting emporium Joann is going out of business
Speed Read The 82-year-old fabric and crafts store will be closing all 800 of its stores
By Peter Weber, The Week US
-
Trump's China tariffs start after Canada, Mexico pauses
Speed Read The president paused his tariffs on America's closest neighbors after speaking to their leaders, but his import tax on Chinese goods has taken effect
By Peter Weber, The Week US
-
Chinese AI chatbot's rise slams US tech stocks
Speed Read The sudden popularity of a new AI chatbot from Chinese startup DeepSeek has sent U.S. tech stocks tumbling
By Peter Weber, The Week US
-
US port strike averted with tentative labor deal
Speed Read The strike could have shut down major ports from Texas to Maine
By Peter Weber, The Week US