Goldman Sachs analysts predict that the U.S. government is "more likely than not" to shut down later this year due to spending disagreements, which could temporarily impact economic growth by reducing it by 0.15-0.2 percentage points per week, with past shutdowns having minimal impact on equity markets.
Despite recent positive economic indicators, experts warn that a recession may still be on the horizon due to the lagged effects of interest rate hikes, increased debt, and a slowing manufacturing sector, cautioning investors not to become complacent.
Recent profit reports from companies such as Amazon, Walmart, and Home Depot, along with other consumer statistics, indicate that the case for a 2023 recession is weakening, as the consumer economy shows resilience with rising real incomes, substantial savings, and continued spending in sectors like automobiles and services.
The global economic slowdown and U.S. recession risks are causing concern among officials, with experts discussing recession forecasts and advising investors on portfolio and sector strategies.
The odds of the U.S. entering a recession by mid-2024 have decreased, but certain regions, such as the West and South, are still more vulnerable due to rapid economic growth, high home prices, and inflation, according to Moody's Analytics. However, a severe downturn is unlikely, and the Midwest and Northeast are less susceptible to a pullback. Overall, the chance of a recession has declined nationwide, but there is still a risk for some metro areas, such as Austin, Boise, Ogden, and Tampa.
Negotiations between the United Auto Workers and automakers are nearing a critical point, but even if there is a strike, it is unlikely to cause a recession in the U.S. economy.
The risk of a global recession in the next 12 to 18 months is high, with financial markets underestimating the chances of a recession in the United States, according to PIMCO executives.
The disconnect between Washington's political showdowns and overwhelming economic anxiety across the country, as revealed in a recent poll, is increasing the likelihood of a government shutdown and eroding confidence in the nation's leaders.
A potential strike at major US automakers could have far-reaching economic consequences, including the threat of job losses, reduced spending, disruptions to car component suppliers, and higher prices for consumers, potentially impacting the US economy as it faces other challenges such as high oil prices and a federal government shutdown.
Potential risks including an autoworkers strike, a possible government shutdown, and the resumption of student loan repayments are posing challenges to the Federal Reserve's goal of controlling inflation without causing a recession. These disruptions could dampen consumer spending, lead to higher car prices, and negatively impact business and consumer confidence, potentially pushing the economy off course.
Entrepreneur Jaspreet Singh warns that signs of a potential recession in America include labor shortages, inflation-driven spending, and high interest rates, with economists predicting that the country may start feeling the effects of a recession by the second quarter of 2024. Singh advises Americans to educate themselves about saving money and investing to prepare for the possible downturn.
The White House warns that a government shutdown at the end of the month could have damaging consequences for the economy, national security, and the American public.
The Federal Reserve has paused raising interest rates and projects that the US will not experience a recession until at least 2027, citing improvement in the economy and a "very smooth landing," though there are still potential risks such as surging oil prices, an auto worker strike, and the threat of a government shutdown.
Summary: Investors shouldn't worry about a government shutdown as it is unlikely to significantly impact the stock market.
Bearish economist David Rosenberg is sticking to his thesis that the US economy is at serious risk, listing 10 reasons including the withdrawal of fiscal stimulus, rising consumer credit delinquency rates, high mortgage rates, and the impact of external factors such as the US auto industry strike and potential government shutdown.
UK companies experienced a challenging September with growing unemployment and recession risks, reflected by a drop in the services sector PMI to its lowest level since the pandemic lockdown, leading to the Bank of England's decision to halt interest rate hikes.
Millions of federal employees and military personnel face the prospect of a government shutdown, which would result in financial hardships for American families, disruptions in services, and potential harm to the economy.
The impending federal shutdown, combined with other economic challenges such as rising gas prices, student loan payments, and reduced pandemic savings, is expected to strain American households and potentially weaken economic growth in the last quarter of the year.
The US economy is currently in decent shape, with a resilient labor market, moderated inflation, and expected strong GDP growth, but there are potential headwinds and uncertainties ahead, including UAW strikes, student debt payments resuming, and the risk of a government shutdown, which could collectively have a significant impact on the economy. Additionally, the labor market is slowing down, inflation remains a concern, and the actions of the Federal Reserve and other factors could influence the economic outlook. While there are reasons for optimism, there are also risks to consider.
There are four risks that could potentially push the US economy into a recession sooner rather than later, including a weakening labor market, headwinds for the consumer, high borrowing rates, and the rising chances of a government shutdown, according to Raymond James.
A potential government shutdown in the U.S. could negatively impact the country's credit rating, highlighting weaknesses in institutional and governance strength, according to Moody's Investors Service. The economic impacts would be concentrated in areas with significant government presence, and the severity of the effects would depend on its duration. If prolonged, it could have a more pronounced effect on business and consumer confidence as well as financial markets.
The impending government shutdown may have an impact on the financial markets, according to Kristina Hooper, Chief Global Market Strategist at Invesco.
Economist David Rosenberg believes a recession is highly likely in the U.S. within the next six months, citing economic headwinds such as rising oil prices and student loan payments, and highlighting the impact of fiscal stimulus fading and consumers slowing their spending.
Investors are increasingly fearful due to a mix of factors including rising oil prices, expectations of higher interest rates, a sluggish Chinese economy, and the possibility of a US government shutdown, leading to concerns of a prolonged period of stagflation and a potential recession.
Americans are becoming more concerned about a possible government shutdown and ongoing labor strikes, causing uncertainty and potential economic impacts, according to the University of Michigan's consumer sentiment survey.
A government shutdown could lead to disruptions in food aid, air travel, and financial markets, and increase the risk of cyber attacks on critical financial infrastructure, according to Karen Petrou of Federal Financial Analytics Inc.
Republican infighting over budget legislation has increased the risk of a government shutdown in the US, potentially leading to thousands of federal workers without pay and negatively impacting the economy, including a reduction in GDP growth and a potential credit rating downgrade.
The United States government is at risk of a partial shutdown, which could impact the progress of crypto bills and hinder the functioning of financial regulators.
US Treasury Secretary Janet Yellen warns that a government shutdown could lead to a recession, with immediate harm and long-term repercussions for the economy.
The U.S. labor market's strength may be at risk as the Federal Reserve's projected interest rate hikes could lead to a slowdown and increased consumer debt, potentially pushing the economy towards a recession.
The ongoing strikes in the U.S., including those in the entertainment industry and by the United Auto Workers, are causing significant economic losses and have raised concerns about a potential recession, with estimates suggesting damages of up to $10 billion and fears of reduced productivity, spending, and hiring.
A new report warns that a recession may be imminent as employment, business optimism, and output continue to decline, with companies struggling to maintain staffing numbers and cope with higher borrowing costs and weaker customer demand.
Amidst economic uncertainty, experts predict a looming recession next year, with varying degrees of certainty, due to factors such as increased costs, global variables, and a potential decline in consumer spending.
The chances of the U.S. economy avoiding a recession are improving, with recession odds dropping to 46 percent, the lowest since the first quarter of 2022, according to economists surveyed by Bankrate. However, risks of a recession remain, with more than 2 in 5 economists suggesting that the chances are still greater than 50 percent.
Economists are predicting that the U.S. economy is less likely to experience a recession in the next year, with the likelihood dropping below 50% for the first time since last year, thanks to factors such as falling inflation, the Federal Reserve halting interest rate hikes, and a strong labor market.
The likelihood of a recession for businesses is high due to increased consumer debt and the impact of high interest rates on buying power.
A recession is expected to hit the US economy in the next nine months due to rising borrowing costs, a tapped out consumer, and ongoing labor strikes, according to Raymond James.