US: How much of a recession risk?

In breve

Over the last weeks, global growth prospects have worsened significantly. While the direct fallout of the war in Ukraine on the US is relatively limited, high fuel prices dampen consumption. In this context, the Fed vows to fight inflation by raising rates at a speed not seen in the last 40 years.
Focal Point

Highlights:

  • Persistent inflation overshoots and the Fed’s aggressive normalisation are weighing on the US outlook. After expanding by just above 2% this year, we expect that in 2023 GDP will grow by 0.9% only, with a high likelihood of a slight quarterly contraction during H1. Risks are tilted to the downside.
  • Our forecast carries an around 45% risk of a recession next year. Healthy private sector balances may partially offset the impact of tighter financial conditions. Yet, high debt and weak fiscal support may burden the recovery.
  • In our baseline scenario, evidence of weakening activity and recession risks will ultimately moderate the Fed’s policy tightening. We see the effective fed funds rate ending the year at 3.1% and peak at 3.4% in Q1 2023.

Read the full publication below

Focal Point I US: How much of a recession risk?
Picture

© Generali Investments, tutti i diritti riservati. Questo sito web è fornito da Generali Investments ed è considerato come una comunicazione di marketing e una promozione finanziaria riferita ai prodotti e servizi delle società elencate di seguito, appartenenti al Gruppo Generali: Generali Investments Partners S.p.A. Società di gestione del risparmio, Generali Insurance Asset Management S.p.A. Società di gestione del risparmio, Generali Investments Luxembourg S.A. e Generali Investments Holding S.p.A. (nel prosieguo, congiuntamente indicate come Generali Investments). Inoltre, il sito può contenere comunicazioni di marketing e promozioni finanziarie di prodotti e servizi di società appartenenti alla piattaforma coordinata da Generali Investments Partners S.p.A. Società di gestione del risparmio, nello specifico di Generali Global Infrastructure, Sycomore Asset Management, Aperture Investors LLC., Plenisfer Investments SGR, Lumyna Investments e Generali Real Estate S.p.A. Società di Gestione del Risparmio