Wall Street doomsayers predict 'mild' US recession in 2024
![A gloomy group of economists are still predicting a US recession in 2024 - despite being proven wrong this year. Wells Fargo, Citigroup and Deutsche Bank are among those claiming a downturn is on its way, though their predictions are notably more moderate this time. Analysts are concerned that high interest rates - currently standing at a 22-year high of 5.25-5.5 percent - will finally pour cold water on consumer spending which has remained surprisingly resilient.](https://i.dailymail.co.uk/1s/2023/12/21/19/79220711-12891167-A_gloomy_group_of_economists_are_still_predicting_a_US_recession-a-467_1703188006884.jpg)
A gloomy group of economists are still predicting a US recession in 2024 - despite being proven wrong this year. Wells Fargo, Citigroup and Deutsche Bank are among those claiming a downturn is on its way, though their predictions are notably more moderate this time. Analysts are concerned that high interest rates - currently standing at a 22-year high of 5.25-5.5 percent - will finally pour cold water on consumer spending which has remained surprisingly resilient.
![It comes after 2023 defied economists' expectations by avoiding a recession thanks to a red-hot jobs market and strong GDP growth. The S&P 500 has had a remarkable rally - and, as of today, is up 22 percent this year. The index has been bolstered by the so-called 'Magnificent Seven' technology stocks including Apple, Amazon and Meta . But fears are rising that higher rates and inflation will start to hit households who have now burnt through their savings built up during the Covid-19 pandemic.](https://i.dailymail.co.uk/1s/2023/12/21/19/78930213-12891167-It_comes_after_2023_defied_economists_expectations_by_avoiding_a-a-460_1703188006653.jpg)
It comes after 2023 defied economists' expectations by avoiding a recession thanks to a red-hot jobs market and strong GDP growth. The S&P 500 has had a remarkable rally - and, as of today, is up 22 percent this year. The index has been bolstered by the so-called 'Magnificent Seven' technology stocks including Apple, Amazon and Meta . But fears are rising that higher rates and inflation will start to hit households who have now burnt through their savings built up during the Covid-19 pandemic.
![A Bloomberg survey of economists found that 32 percent now predict a recession within the next 12 months. The vast majority - 49 percent - forecast a 'soft landing' whereby there is a slowdown in economic growth that avoids a recession. Some 32 percent said there will be a 'hard landing that avoids a recession' - meaning a significant economic slowdown followed by a period of growth. Brett Ryan, a senior US economist at Deutsche Bank, told the outlet: 'It barely qualifies as one, but yes, technically it would be a recession.](https://i.dailymail.co.uk/1s/2023/12/21/19/78928157-12891167-A_Bloomberg_survey_of_economists_found_that_32_percent_now_predi-a-461_1703188006653.jpg)
A Bloomberg survey of economists found that 32 percent now predict a recession within the next 12 months. The vast majority - 49 percent - forecast a 'soft landing' whereby there is a slowdown in economic growth that avoids a recession. Some 32 percent said there will be a 'hard landing that avoids a recession' - meaning a significant economic slowdown followed by a period of growth. Brett Ryan, a senior US economist at Deutsche Bank, told the outlet: 'It barely qualifies as one, but yes, technically it would be a recession.
!['The risks, especially in light of a dovish Fed, are that we don’t get as much of a slowdown. Financial conditions right now are easing pretty considerably, and that introduces upside risk to our forecast.' Similarly, Citigroup's Andrew Hollenhorst predicts a slump is on its way. 'We think the effects of higher interest rates are finally having the expected effect of slowing the US economy,' he told Bloomberg.](https://i.dailymail.co.uk/1s/2023/12/21/19/79223565-12891167-_The_risks_especially_in_light_of_a_dovish_Fed_are_that_we_don_t-a-462_1703188006654.jpg)
'The risks, especially in light of a dovish Fed, are that we don’t get as much of a slowdown. Financial conditions right now are easing pretty considerably, and that introduces upside risk to our forecast.' Similarly, Citigroup's Andrew Hollenhorst predicts a slump is on its way. 'We think the effects of higher interest rates are finally having the expected effect of slowing the US economy,' he told Bloomberg.
!['We see increasing signs in the labor market, including a rising unemployment rate and continuing jobless claims, that suggest hiring will slow.' Meanwhile Wells Fargo senior economist Sam Bullard said that an expected rise in unemployment will trigger a downturn. He added it would be 'certainly mild by historical standards.' 'We would fully admit that there's certainly a path where a recession doesn't unfold: We continue to moderate,' he said. Last year, economists offered much more stark predictions with the vast majority predicting a recession was about to take place.](https://i.dailymail.co.uk/1s/2023/12/21/19/79224731-12891167-_We_see_increasing_signs_in_the_labor_market_including_a_rising_-a-463_1703188006654.jpg)
'We see increasing signs in the labor market, including a rising unemployment rate and continuing jobless claims, that suggest hiring will slow.' Meanwhile Wells Fargo senior economist Sam Bullard said that an expected rise in unemployment will trigger a downturn. He added it would be 'certainly mild by historical standards.' 'We would fully admit that there's certainly a path where a recession doesn't unfold: We continue to moderate,' he said. Last year, economists offered much more stark predictions with the vast majority predicting a recession was about to take place.
![A Bloomberg survey in December 2022 found there was a 70 percent of a recession in 2023. Barclays Capital Inc. said 2023 would go down as one of the worst for the world economy while Fidelity Investments labeled a US recession in the coming months 'likely.' The predictions were driven by high inflation which was then hovering at a rate of 6.5 percent. Rampant inflation in turn sparked an aggressive campaign by the Fed to hike interest rates. But the economy has remained surprisingly resilient, thanks to a strong labor market - which has kept the rate of unemployment at a low of 3.7 percent - and strong consumer spending.](https://i.dailymail.co.uk/1s/2023/12/21/19/79223563-12891167-A_Bloomberg_survey_in_December_2022_found_there_was_a_70_percent-a-465_1703188006655.jpg)
A Bloomberg survey in December 2022 found there was a 70 percent of a recession in 2023. Barclays Capital Inc. said 2023 would go down as one of the worst for the world economy while Fidelity Investments labeled a US recession in the coming months 'likely.' The predictions were driven by high inflation which was then hovering at a rate of 6.5 percent. Rampant inflation in turn sparked an aggressive campaign by the Fed to hike interest rates. But the economy has remained surprisingly resilient, thanks to a strong labor market - which has kept the rate of unemployment at a low of 3.7 percent - and strong consumer spending.
![Inflation also cooled to a rate of 3.1 percent last month - nearing the Fed's 2 percent target. It means that many economists have a more positive outlook for the new year. Neil Dutta, director of economic research at Renaissance Macro Research LLC said any suggestion America would hit a recession next year were 'ridiculous.' 'What’s their story? That higher rates have almost no impact at first and then all of a sudden the economy just spontaneously combusts? That’s not consistent with empirical research,' he told Bloomberg. Read the full story: https://www.dailymail.co.uk/yourmoney/wells-fargo/article-12890463/wall-street-citigroup-wells-fargo-predict-recession.html?ito=msngallery](https://i.dailymail.co.uk/1s/2023/12/21/19/79096697-12891167-Inflation_also_cooled_to_a_rate_of_3_1_percent_last_month_nearin-a-466_1703188006655.jpg)
Inflation also cooled to a rate of 3.1 percent last month - nearing the Fed's 2 percent target. It means that many economists have a more positive outlook for the new year. Neil Dutta, director of economic research at Renaissance Macro Research LLC said any suggestion America would hit a recession next year were 'ridiculous.' 'What’s their story? That higher rates have almost no impact at first and then all of a sudden the economy just spontaneously combusts? That’s not consistent with empirical research,' he told Bloomberg. Read the full story: https://www.dailymail.co.uk/yourmoney/wells-fargo/article-12890463/wall-street-citigroup-wells-fargo-predict-recession.html?ito=msngallery
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