Big Banks Predict Significant Economic Downturn in 2023: POLL

Of the 23 major financial institutions that work directly with the Federal Reserve, 16 anticipate a recession within the next 12 months, with two anticipating one the year after, according to a survey published by The Wall Street Journal Monday.

These institutions, which range from Bank of America to UBS, note that Americans are spending their savings, banks are heightening lending standards and the housing market is in a decline, all classic warning signs that a recession is impending, the WSJ reported. All of this is being exacerbated, the banks say, by the Fed’s historically aggressive pace of interest rate hikes, designed to blunt stubbornly persistent inflation.

The Fed hiked interest rates after several administration officials infamously described spiking inflation at the end of 2021 as “transitory,” shattering expectations of a relatively uneventful economic year in 2022, the WSJ reported. Economists polled by the WSJ expect that the unemployment rate — which has remained low at 3.7% despite high rates — will jump past 5% in 2023, potentially costing millions of jobs.