Over half of U.S. small business owners believe the economy is already in a recession, though their own financial conditions remain strong and they have less concerns about the health of their banks, according to a survey by the National Federation of Independent Business.
The majority of economists polled by Reuters predict that the U.S. Federal Reserve will not raise interest rates again, and they expect the central bank to wait until at least the end of March before cutting them, as the probability of a recession within a year falls to its lowest level since September 2022.
Despite the optimism from some economists and Wall Street experts, economist Oren Klachkin believes that elevated interest rates, restrictive Federal Reserve policy, and tight lending standards will lead to a mild recession in late 2023 due to decreased consumer spending and slow hiring, although he acknowledges that the definition of a recession may not be met due to some industries thriving while others struggle.
The performance of Nvidia stock has been impressive, but other retailers have struggled, leading to concerns about the economy, such as credit card delinquencies, falling home sales, weakening manufacturing, and tightening lending standards. These factors suggest that a recession may be looming.
The US economy is expected to slow in the coming months due to the Federal Reserve's efforts to combat inflation, which may lead to softer consumer spending and sideways movement in the stock market for the rest of the year, according to experts. Additionally, the resumption of student loan payments in October and the American consumer's credit card debt could further dampen consumer spending. Meanwhile, Germany's economy is facing a recession, with falling output and sticky inflation contributing to its contraction this year, making it the only advanced economy to shrink.
Concerns of a stock market crash are growing as economists await the release of the second-quarter GDP report, which could provide insight into the impact of the Federal Reserve's rate-hike campaign and future monetary policy changes. The report may have a significant effect on equity markets, which have been sensitive to economic data releases this year.
The number of job openings in the US fell to 8.8 million at the end of July, indicating a slowing economy, with declines seen in professional and business services, healthcare, and state and local government sectors, while the information industry and transportation saw increases in job openings. Additionally, consumer confidence dipped in August as Americans grew more concerned about rising prices of gas and groceries, and home prices continued to increase in June.
Bitcoin could experience a major market correction in September, potentially dropping by more than 16% based on historical performance and predictions by crypto analyst Benjamin Cowen.
Fidelity International's Salman Ahmed maintains his prediction of a recession next year, citing the full impact of the Federal Reserve's monetary policy tightening and a wave of corporate debt refinancing as leading factors.
The U.S. economy is defying expectations with continued growth, falling inflation, and a strong stock market; however, there is uncertainty about the near-term outlook and it depends on the economy's future course and the actions of the Federal Reserve.
Top economist David Rosenberg predicts that the US will experience a recession within the next six months due to the aggressive interest rate hikes by the Federal Reserve and the erosion of credit quality in credit card debt.
Goldman Sachs has lowered its probability of a U.S recession in the next 12 months to 15% due to positive inflation and labor market data, while also predicting a reacceleration in real disposable income and expecting the Federal Reserve to keep interest rates unchanged.
U.S. markets experienced a drop on Tuesday, with VinFast Auto seeing the largest decline.
US stocks dropped on Wednesday as fears of more Federal Reserve rate hikes circulated, with Big Tech names like Apple and Nvidia dragging major indexes lower. Boston Fed President Susan Collins warned that further policy tightening could be warranted, while the Fed's Beige Book indicated softer activity growth and a cooling labor market in July and August.
Despite recent optimism around the U.S. economy, Deutsche Bank analysts believe that a recession is more likely than a "soft landing" as the Federal Reserve tightens monetary conditions to curb inflation.
The US economy is predicted to enter a recession by spring, leading to a 25% or more crash in the S&P 500, according to economist David Rosenberg, who warns that American consumers are nearing their spending limits and rising home prices reflect a weak housing market.
The US banking industry faces significant downside risks from inflation and high interest rates, which could weaken profitability and credit quality, according to FDIC Chair Martin Gruenberg.
The US banking industry is experiencing signs of stress, with second-quarter earnings dropping 11.3% due to bank failures, while declining interest rates and rising costs pose challenges for profitability, according to the Federal Deposit Insurance Corp.
The possibility of a recession should not be dismissed by equity investors despite recent stock market rallies, warns economist Michael Darda, who notes that historical data shows that recession typically follows an inversion in the yield curve within an average of 14 months.
The odds of a recession in the US have collapsed, making markets vulnerable to any signs of the economy overheating and contributing to inflationary pressures.
The US banking system is expected to undergo a major consolidation as confidence in the financial sector wanes, with regional banks likely to decrease by half in the coming years, according to Kevin O'Leary, a venture capitalist from Shark Tank. People are withdrawing money from banks due to concerns over potential failures and the limited guarantee on deposits, leading to a drop in total deposits for five consecutive quarters.
The US consumer is predicted to experience a decline in personal consumption in early 2024, which could lead to a potential recession and downside for stocks, as high borrowing costs and dwindling Covid-era savings impact household budgets.
Stocks could crash nearly 50% as a severe recession sets in, according to veteran technical analyst Milton Berg, who cited investor complacency and banking woes as risk factors.
The US economy is facing a looming recession, with weakness in certain sectors, but investors should not expect a significant number of interest-rate cuts next year, according to Liz Ann Sonders, the chief investment strategist at Charles Schwab. She points out that leading indicators have severely deteriorated, indicating trouble ahead, and predicts a full-blown recession as the most likely outcome. Despite this, the stock market has been defying rate increases and performing well.
Kyle Bass predicts that the US banking industry will suffer losses of hundreds of billions of dollars due to exposure to the office market, representing a 10% hit to US banking equity, while industrial and multi-family sectors will remain strong.
Goldman Sachs CEO David Solomon believes the U.S. economy is unlikely to experience a significant recession, but warns that inflation will be more persistent than anticipated.
Bank of America's stock fell 0.31% as the overall stock market had a mixed trading session, with the S&P 500 rising and the Dow Jones falling, ending a three-day winning streak.
The regional banking crisis in the U.S. during March of this year has had lasting effects on the industry and the economy, with tightened credit conditions and a risk of over-correction in interest rates, according to interviews with regional bank executives and economists.
