1. Research

Why a recession by end-2023 should be the base case

Peter Hooper

Matthew Luzzetti

Matthew Barnard

In this episode
Peter Hooper, Global Head of Economic Research, and Matthew Luzzetti, Chief US Economist, discuss how the US economy is the furthest away from the Fed’s targets in forty years. This gap, captured by persistently elevated inflation and a historically tight labour market, is likely to necessitate a more aggressive response from the Fed that ultimately leads to a recession by the end of next year.

Why a recession by end-2023 should be the base case
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What we discuss 
  • What are our baseline views for the US economy and monetary policy?
  • Could the pending recession be worse than expected?
  • Can the Fed relieve pressure in the labour market without raising unemployment significantly?
  • What needs to go right for the Fed to avoid a hard landing?  
  • How might the recent sharp tightening of financial conditions impact the Fed’s response?  

Further reading:

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