Not good. We already had a “technical recession” in 2022. Now comes a full-on recession/depression?
At least one-third of the world will be in a recession this year, International Monetary Fund (IMF) chief Kristalina Georgieva says.
Her prediction comes as a majority of economists at large U.S. financial institutions said a recession was likely in several newly published reports.
“We expect one-third of the world economy to be in recession,” Georgieva told CBS News’ “Face the Nation” on Sunday. “Even in countries that are not in recession, it would feel like a recession for hundreds of millions of people.”
Her remarks reiterated claims made by the IMF in its latest biannual global economic outlook published last October. In it, it stated, “Global growth is forecast to slow from 6 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic.”
It also said, “More than a third of the global economy will contract this year or next, while the three largest economies – the United States, the European Union, and China – will continue to stall.
“In short, the worst is yet to come, and for many people 2023 will feel like a recession.”
According to a new analysis by The Wall Street Journal, a majority of economists it surveyed from 23 financial institutions, including trading firms and investment banks, said the U.S. will be in a recession this year and millions of Americans are expected to lose their jobs.
“Big banks are predicting that an economic downturn is fast approaching,” The Wall Street Journal reported. Over two-thirds of economists at “23 financial institutions that do business directly with the Federal Reserve are betting the U.S. will have a recession in 2023,” it said. Two other institutions it surveyed said the recession would hit the U.S. in 2024.
They cited weakening consumer spending, Americans depleting their savings, the Fed increasing interest rates that will drive up costs, and banks tightening their lending standards, making access to credit less attainable as reasons for an imminent recession.
These factors and worsening economic conditions would likely result in companies laying off employees to mitigate their losses. Millions of Americans are expected to lose their jobs this year, the economists project, and the national unemployment rate will exceed 5%.
This is after Americans experienced 40-year high inflation in 2022 causing, gas prices and consumer good costs to skyrocket, Te stock market also recorded losses in 2022 not seen since 2008.
Despite these predictions and economic indicators over the past year pointing to a recession, five large institutions the WJS surveyed said the U.S. would avoid an economic downturn this year, including Credit Suisse, Goldman Sachs, HSBC, JPMorgan Chase, and Morgan Stanley.
The majority of 10 large financial institutions surveyed by SMB Law Group also project a negative economic outlook for 2023. Among them, JP Morgan said 2023 would be “a bad year for the economy, a better year for markets.” Morgan Stanley said, expect a year of “long and variable lags” and projected that inflation would remain “stubbornly high.”
In December, at a Goldman Sachs financial conference, Bank of America CEO Brian Moynihan indicated that the U.S. would experience “negative growth” in the first part of 2023. Goldman Sachs CEO David Solomon also said at the conference, “Economic growth is slowing. When I talk to our clients, they sound extremely cautious.”
In the SMB survey, Blackrock said “a recession is foretold,” adding that “Central banks won’t ride to the rescue when growth slows in this new regime, contrary to [expectations]. They are deliberately causing recessions …”
Barclays said, “Next year will be a long, hard slog. Major central banks will remain restrictive even as economies contract.”
Credit Suisse said, “Looking ahead, we expect financial market volatility to remain elevated as risks persist and global financial conditions remain tight.”