Why the United States is on the verge of a “great recession”, according to Deutsche Bank

Why the United States is on the verge of a “great recession”, according to Deutsche Bank

There are already several indicators that expect the US to be heading into a recession, Deutsche Bank has indicated since the beginning of the month that it was a “slight” recession but In the bank’s latest note to customers, it raised the tone, noting it was a “great recession.”.

In their last note, the bank’s economists warned that This is an even sharper slowdown over the next two yearsbecause the Federal Reserve (Fed) is looking for inflation that it doesn’t see and that it intends to control with a series of interest rate increases.

“We are going to see a significant recession, but our strong view is that the sooner the Fed acts aggressively, the less long-term damage to the economy will be.”And “Why will the next recession be worse than expected?” the analysts wrote in the financial report..

The analysis indicates that although inflation may be at its peak, it will take a long time before falling back to the Fed’s 2% targetWhich means that the central bank will raise interest rates aggressively at the expense of the economy.

“We believe that … the Fed is likely to have to push more aggressively, and It will take a deep recession to end inflationEconomists note.

At the start of the month, Deutsche Bank predicted a ‘moderate’ recessionBut his prognosis worsened with the Fed’s emphasis on sharply raising interest rates.

Deutsche Bank information is published after The Bureau of Economic Analysis (BEA) announced this Thursday that US GDP declined at an annual rate of 1.4% in the first quarter of 2022After rising 6.9% in the fourth quarter of 2021.

The decline in GDP reflected the decline in private inventory investment, exports, federal government spending, and local and state government spending.

Bank of America (BofA) and Goldman Sachs also raised the possibility Recession occurs in the next two years in the United States.

This week, Ken Hoxter, managing director of trucking research at Bank of America, pointed out Carriers are seeing a rapidly weakening demand for trucksIt fell for the fourth consecutive month to its lowest level since June 2020.

The index is declining annually by 23%, which means that it is “(close to) the level of stagnation in the transport of goods,” warns the analyst who Ensures that road transport is a fairly accurate indicator of how the US economy is operating which is why it is considered a reliable standardAnd Because when people buy fewer products, companies charge less and business slows down.

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