According to the economists polled by the Wall Street Journal, in the next 12 months, the US economy will slip into a recession and face high unemployment.
Analysts at the Wall Street Journal are sure that the United States will inevitably tip into a recession within the year. What is more, the unemployment rate is expected to rise significantly. The likelihood of these unfavorable events is estimated at 63%. Most market participants are also concerned about the possibility of the US economic slump.
In July 2022, economists supposed that in the first quarter of 2023, the US GDP would advance by 0.8% on a yearly basis, whereas in the second quarter, it was expected to rise by 1%. However, they had to revise their forecasts downward. Now, most analysts foresee a 0.2% and then a 0.1% drop in GDP. The Wall Street Journal also highlighted an extremely gloomy outlook for 2023.
Analysts predict that the economic collapse in the US will have a negative influence on the labor market. Preliminary estimates unveiled that in the second quarter of 2023, the number of jobs in the non-farm sector will decline by 34,000 a month, whereas, in the third quarter, the fall will total 38,000. These economic predictions are based on the analysis of the Fed’s actions.
Earlier, analysts had doubts about a further rise in the key interest rate. Notably, the Federal Reserve resorted to such a measure to combat surging inflation. However, it is vitally important to maintain the balance to avoid higher unemployment and an economic downturn.
In late September, Bloomberg announced that western central banks were raising the benchmark rate. Although these steps are aimed at slackening inflation, they may lead to a slump in government bonds. Strategists at Bank of America think that global bond markets are on the verge of the worst performance since 1949.
