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Large Bank Intensifies Forecast for US Economy, Declares 'A Major Recession' Is Coming

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A major multinational bank has a gloomy forecast for America’s economy, saying that despite federal leaders wanting to wish away inflation, it is poised to do even more damage.

“We will get a major recession,” Deutsche Bank economists wrote in a report issued Tuesday, according to CNN. The report is titled, “Why the coming recession will be worse than expected.”

“The scourge of inflation has returned and is here to stay,” Deutsche Bank said.

“It is sorely tempting to take a go-slow approach hoping that the U.S. economy can be landed softly on a sustainable path. This will not happen,” the report said.

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“Our view is that the only way to minimize the economic, financial, and societal damage of prolonged inflation is to err on the side of doing too much,” the report from the German bank said.

Inflation, as measured by the Consumer Price Index, hit 8.5 percent in March, the highest level in 40 years.

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Although many forecasters have said they think inflation might be hitting its peak, the Deutsche Bank report said it will not go away quickly, saying that inflation will remain “persistently elevated for longer than generally anticipated.”

That, in turn, will force the Federal Reserve to act by raising interest rates to the point where the economy suffers.


“We regard it…as highly likely that the Fed will have to step on the brakes even more firmly, and a deep recession will be needed to bring inflation to heel,” the report said.

“We will get a major recession, but our strongly held view is that the sooner and the more aggressively the Fed acts, the less longer-term damage to the economy there will be,” the report said, according to Bloomberg.

Peter Hooper, global head of economic research for Deutsche Bank, said the recession he and his team of economists expect will be “something lasting several quarters, with a substantial drop in GDP and unemployment going up by 3 percentage points, but enough to turn the inflation psychology,” according to MarketWatch.

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“We have a substantial inflation problem and historically the Fed has not been able to deal with this kind of inflation problem without a significant downturn in the economy,” he said.

However, Federal Reserve Chairman Jerome Powell, who for months dismissed inflation as transitory, said he does not expect a crisis, according to Fox Business.

“The probability of a recession in the next year is not particularly elevated,” Powell said. “All signs are that this is a strong economy, and one that will be able to flourish in the face of less accommodative monetary policy.”

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Jack Davis is a freelance writer who joined The Western Journal in July 2015 and chronicled the campaign that saw President Donald Trump elected. Since then, he has written extensively for The Western Journal on the Trump administration as well as foreign policy and military issues.
Jack Davis is a freelance writer who joined The Western Journal in July 2015 and chronicled the campaign that saw President Donald Trump elected. Since then, he has written extensively for The Western Journal on the Trump administration as well as foreign policy and military issues.
Jack can be reached at jackwritings1@gmail.com.
Location
New York City
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Topics of Expertise
Politics, Foreign Policy, Military & Defense Issues




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