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.
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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.
