Now: US Recession on Horizon

According to the Financial Times (FT), nearly 70% of the leading academic economists suggest that the US economy will start to enter recession phase by next year. The main reason for the prediction is because the rapid rebound from the economy after the Covid slump in which resulted in the highest inflation in 40 years.

In order to contain the inflation, a very strict tightening policy must be done by the Fed in which can result in impact and shock to the economy growth. So far Fed suggest that they will gradually raise the rate but according to the 40% of the economist, Fed will fail to contain the inflation with the current pace of tightening.

According to the Dean Croushore who is an economist at Philadelphia Fed, the central bank would probably need to raise the rate until 5% to contain the current inflation rate.