The United States economy will fall into a recession, albeit a mild one, by year-end, Nomura economists Aichi Amemiya and Robert Dent of investment bank Nomura wrote in a note Monday.
"With rapidly slowing growth momentum and a Fed committed to restoring price stability, we believe a mild recession starting in the fourth quarter of 2022 is now more likely than not," the economists wrote, Bloomberg reports.
"Disruptions in the energy and food sectors, coupled with declining consumer sentiment, are contributing to a looming economic slowdown in the U.S. and abroad," the Nomura report said.
Nomura is now predicting U.S. gross domestic product (GDP) growth of just 1.8% in fiscal 2022, down from its previous forecast of 2.5%. In 2023, Nomura forecasts GDP will contract by 1%, as opposed to the 1.3% growth previously expected.
Keeping the U.S. from a more pronounced recession will be strong balance sheets and amassed savings, enabling U.S. consumers and businesses to withstand the downturn from positions of reasonable strength, the economists said.
Bank of America puts the chance of the U.S. entering a recession in 2023 at 40%. It forecasts U.S. GDP in 2023 will stagnate.
"Our worst fears around the Fed have been confirmed: They fell way behind the curve and are now playing a dangerous game of catch-up," wrote BofA analysts led by Ethan Harris. "We look for GDP growth to slow to almost zero, inflation to settle at around 3%, and the Fed to hike rates above 4%."
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