Numerous prominent economists and financial institutions predicted a recession in the new year.
The U.S. economy contracted in July for the second consecutive quarter. This indicates that the country is currently in a technical recession.
According to the Bureau of Economic Analysis (BEA), the real gross domestic product (GDP), which is the inflation-adjusted price of goods and services sold by an economy, fell 0.9% in the second quarter of 2022.
Investopedia defines a recession as “a significant, widespread, or prolonged downturn in economic activity.” Recessions can last up to six months. One rule of thumb is that a country should experience two consecutive quarters with a decline in its Gross Domestic Product (GDP).
Janet Yellen, U.S. Treasury Secretary, refuted the idea that the country is in recession.
President Joe Biden stated that the United States’ current economic situation “doesn’t sound like a crisis.” Biden stated that he doesn’t believe there will be a recession and suggested that there might be a “very minor recession”. Biden stated that Americans do not need to be prepared for a recession.
Many business leaders and economic experts warn that there will be a recession next year. Inflation, rate rises, and supply chain problems could all contribute to the 2023 recession.
Jamie Dimon, CEO of JP Morgan, warned in October that the United States will experience a recession within six months. Dimon said in December that inflation is “eroding all things”.
Nouriel Roubini, also known as Dr. Doom, was the one who predicted the 2008’s housing crash in the United States. He then gave a worrying economic forecast for 2023.
Roubini stated to Bloomberg that the S&P 500 drops by 30% in a short, shallow recession. “So even in a mild recession, you’ll still have 15% to go down.”
Roubini, a professor emeritus in the Stern School of Business at New York University, stated that if we have a more severe recession than a brief and shallow one but not as severe as the GFC, there could be another 25% of downside potential.
Carl Icahn, a billionaire investor, stated in September that “the worst is yet to happen.”
Icahn stated that “We printed too much money and thought the party would never stop.” Inflation is a horrible thing. “You can’t cure it.”
Kay Daniel Neufeld, director and head for forecasting at The Center for Economics and Business Research, said this week, “It is likely that the global economy will face a recession next year due to the rises of interest rates as a response to higher inflation.”
Citi Global Wealth Investments predicts that the U.S. will experience a mild recession in 2023. This will result in 2 million job losses, which will increase unemployment to 5%.
The 2023 outlook report stated that “we believe that the Fed’s rate hikes have been too stringent” and predicted an economic contraction by 2023. “And if Fed doesn’t pause rate increases until it sees the contraction then a deeper recession could ensue.”
KPMG, the fourth-largest global accounting firm, released an October report. It surveyed top executives and found that while confidence is high over the next three years, they anticipate difficulties in the short term. Nearly 9 out of 10 CEOs (86%) believe that a recession will occur within the next 12 months. However, 3 out 5 (58%) feel it will only be mild and brief and 76% have plans to handle it.
According to the report, “Seventy-three percent of CEOs think a recession would upend expected growth over the next three years.” Three-quarters (75%) also believe that a recession would make it harder for post-pandemic recovery.
According to a Bloomberg poll, 38 economists said that 7 in 10 Americans believe the U.S. will fall into recession next year. This would reduce demand forecasts and trim inflation projections after massive interest rate hikes by Federal Reserve.
The World Bank warned in September that “as central banks around the globe simultaneously raise interest rates to respond to inflation, the world could be on the verge of a global recession by 2023.” They also warned about a series of financial crises in emerging markets and developing economies that could cause them permanent harm.
The International Monetary Fund (IMF), in October, predicted that global growth would slow down to 2.7% by 2023.
The report stated that “more than a third” of the world’s economy would contract in the next year, while the three largest economies, the United States, Europe, and China, will continue to stall. “In short, it is not over yet, and 2023 will feel like a depression for many people.”
To conclude, I would not listen to what Biden saying that we are not in a recession and may see a minor recession but it being nothing to worry about. I would save as much money as possible, and not go into any more debt than I already am, in order to stay afloat during this year. As I have already mentioned it is going to feel like we are in a depression so it is very important to be prepared. I would always rather be safe than sorry.