Mild U.S. Recession Forecast for 2024
A mild recession could hit the U.S. in the first half of 2024, Deutsche Bank analysts said in a new global outlook Monday, pointing toward softening economic data.
The lagged impact of interest-rate hikes will trigger a recession, though it won’t be a severe one, they said. They expect unemployment to peak at 4.6% by the third quarter, up from the October rate of 3.9%.
The downturn will lead the Federal Reserve to begin cutting rates in June, with a total of 175 basis points of cuts next year, they added.
“Monetary policy famously operates with lags which are highly uncertain in their timing and impact. A U.S. recession before this point would have been early historically relative to the start of the hiking cycle,” Deutsche Bank’s head of global economics Jim Reid said.
Just one of the last 13 Fed hiking cycles has led to a recession within 18 months, the report added, with six cycles leading to a recession between 19 and 28 months. It’s now been 20 months since the first Fed hike of this cycle.
“So history would say that peak risks are more skewed to the next two to three quarters rather than the last few,” Reid added.
