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.
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.
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.
-
Roasted squash and apple soup recipeThe Week Recommends Autumnal soup is full of warming and hearty flavours
-
Ukraine: Donald Trump pivots againIn the Spotlight US president apparently warned Volodymyr Zelenskyy to accept Vladimir Putin’s terms or face destruction during fractious face-to-face
-
Autumn Budget: will Rachel Reeves raid the rich?Talking Point To fill Britain’s financial black hole, the Chancellor will have to consider everything – except an income tax rise
-
Warner Bros. explores sale amid Paramount bidsSpeed Read The media giant, home to HBO and DC Studios, has received interest from multiple buying parties
-
Gold tops $4K per ounce, signaling financial uneaseSpeed Read Investors are worried about President Donald Trump’s trade war
-
Electronic Arts to go private in record $55B dealspeed read The video game giant is behind ‘The Sims’ and ‘Madden NFL’
-
Fed cuts interest rates a quarter pointSpeed Read ‘The cut suggests a broader shift toward concern about cracks forming in the job market’
-
New York court tosses Trump's $500M fraud fineSpeed Read A divided appeals court threw out a hefty penalty against President Trump for fraudulently inflating his wealth
-
Trump said to seek government stake in IntelSpeed Read The president and Intel CEO Lip-Bu Tan reportedly discussed the proposal at a recent meeting
-
US to take 15% cut of AI chip sales to ChinaSpeed Read Nvidia and AMD will pay the Trump administration 15% of their revenue from selling artificial intelligence chips to China
-
NFL gets ESPN stake in deal with DisneySpeed Read The deal gives the NFL a 10% stake in Disney's ESPN sports empire and gives ESPN ownership of NFL Network
