WELCOME BACK, CARTER! Deutsche Bank is the first big bank to forecast a US recession.
Although Deutsche Bank cautioned there is “considerable uncertainty” around the exact timing and size of the downturn, it’s now calling for the US economy to shrink during the final quarter of next year and the first quarter of 2024, “consistent with a recession during that time.”
The good news is Deutsche Bank is not forecasting a deep and painful recession like the past two downturns.
Rather, the bank expects a “mild recession,” with unemployment peaking above 5% in 2024. That would still translate to considerable layoffs. During the Great Recession unemployment peaked at far higher levels of 14.7% in 2020 and 10% in 2009.
This coming recession would allow inflation to get back towards the Fed’s target by the end of 2024, Deutsche Bank said.
“With the unemployment rate receding only slowly following the peak, inflation should continue to moderate, falling to the Fed’s 2% objective in 2025,” Deutsche Bank said.
Hey, fair is fair — whoever is running against Biden (or his replacement) in 2024 gets to call that “the worst economy in fifty years!”, don’t they?