The odds of the U.S. economy falling into a recession within the next 12 months have surged since June, according to a recent survey of economists by Bloomberg.
According to the survey, the likelihood of an economic downturn over the next year stands at 47.5 percent, a sharp incline from the 30 percent estimate given in June, and a substantial increase from the 20 percent odds given in March.
Bloomberg’s latest survey was conducted from July 8–14 among 34 economists.
Economists also cut estimates for second-quarter growth to a 0.8 percent annualized rate, down from a 3 percent median forecast in June’s survey.
Growth is estimated to be less than 2 percent in the latter half of the year, according to Bloomberg.
Meanwhile, GDP is seen averaging 2.1 percent for 2022, a decline from the 2.6 percent growth projection from June.
In 2023, GDP is seen rising an average 1.3 percent, according to the report.
The latest survey data comes as the 12-month Consumer Price Index (CPI) hit a new four-decade high of 9.1 percent in June, prompting speculation that the Federal Reserve may accelerate its tightening efforts by as many as 100 basis points at its July meeting.
Mohamed El-Erian, chief economic adviser of Allianz, at FOX Studios in New York on April 29, 2016. Rob Kim/Getty Images
‘Fed Policy Mistake’
Some economists warn that such a move could increase the possibility of a recession.
Mohamed El-Erian, the former CEO of American investment management firm PIMCO, warned last week that a third wave of inflationary pressure will “be unleashed if the Fed doesn’t get its act together quickly,” but noted that he expects inflation to come down over the next couple of months.
“With the first best policy option now long gone due to the first two stages of the ongoing Fed policy mistake, the recession risks are increasing accordingly,” El-Erian wrote on Twitter.
Meanwhile, the International Association of Credit Portfolio Managers (IACPM), an association of fund managers, has predicted that there is a growing risk of credit defaults as borrowing costs soar amid central bank interest rate hikes.
According to the latest quarterly survey carried out by the group among its members, which includes portfolio managers at some of the biggest commercial banks, investment banks, and insurance companies in the world, none believe that corporate defaults would decline.
“Rather, an overwhelming majority believe defaults will rise in North America, Europe, Asia, and Australia,” IACPM said in a statement.
Amid a gloomy outlook for the U.S. economy, an increasing number of Americans are now racing to secure new jobs before a recession hits, a recent survey from the job posting website Joblist found.
According to that survey, 60 percent of Americans said they felt more urgency to find a new job before conditions in the job market change.
A separate Goldman Sachs survey released on July 13 found that an overwhelming majority of small business owners share deep concerns over where the economy is headed, with 93 percent stating that they are worried that the United States will experience a recession within the next year.
The Biden administration continues to play down the risk of a recession, with White House economic adviser Jared Bernstein telling “Fox News Sunday” on July 17, “It is very hard to conclude we are in a recession when you look at the payroll and the job gains that we’ve seen.”
Bernstein also pointed to “very strong tailwinds that are boosting consumers” as factors but acknowledged that prices are currently “unacceptably” elevated.
However, some lawmakers have hit out at the Biden administration over the current worsening inflation.
During a July 13 news conference, Sen. Mike Crapo (R-Idaho), the top GOP member of the Senate Finance Committee, noted that inflation was 1.7 percent when Biden came into office and now stands at 9.1 percent as of June.
Tom Ozimek contributed to this report.
Katabella Roberts
Author
Katabella Roberts is a news writer for The Epoch Times, focusing primarily on the United States, world, and business news.
