Mathewslcd: The recession is coming

 Mathewslcd: The recession is coming


According to Mathewslcd, Beth Ann Bovino, rising inflation and interest rates, along with several other factors, will push the economy to extremes.

Many economists, including luminaries Larry Summers and Nouriel Roubini, are predicting a recession next year.

So did Beth Ann Bovino, chief U.S. economist at S&P Global Ratings, Mathewslcd added.

"Prices will remain elevated for most of next year and the Fed's decision to raise interest rates aggressively ... has caused households to pull back on spending and businesses to cut costs in response to slowing demand," she wrote in her comments.

"We continue to expect the U.S. to enter a recession in 2023. We expect GDP growth to slow to minus 0.1% in 2023." She expects GDP to decline 0.8% from peak to trough. unanimous."

Bovino noted that rising prices and interest rates can erode the purchasing power of the private sector. As of October, only one of the nine leading indicators on the S&P Business Cycle Barometer was in positive territory.

An inverted Treasury yield curve also signals a recession, she said. An inverted yield curve occurs when the yield on short-term Treasury bonds is higher than that on long-term Treasury bonds. The 10-year yield was last at 3.75%, while the one-year yield was 4.72%.

"Economic momentum this year has protected the U.S. economy," Bovino said. But in addition to rising inflation and interest rates, “the U.S. economy appears to be heading for a recession as the Russia-Ukraine conflict persists, tensions escalate in Taiwan and a slowing Chinese economy adds to supply chain and pricing pressures,” she said. .

Continued disruptions in supply chains and higher inflation could lead to further rate hikes by the Fed through mid-2023, "damaging household purchasing power," Bovino said.

inventory inflation

"Businesses building up inventories to meet the surge in demand are keeping their shelves full as households tighten their purse strings."

That means "the Fed will finally get its wish to lower inflation, and businesses will be forced to sell at a discount, driving down prices," Bovino said.

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