The U.S. economy falling into recession within the next 12 months is a virtual certainty, according to the latest Bloomberg Economics forecast model released on Monday.
The dire projection surfaced just weeks before national midterm elections that will determine control of Congress. Just one week ago, an embattled President Joe Biden insisted a recession was unlikely and said any downturn would be “very slight” if it does occur.
The likelihood of a recession was 65% in the Bloomberg model’s most recent previous update. Generated by economists Anna Wong and Eliza Winger, the model utilizes 13 macroeconomic and financial indicators to assess the odds of a downturn from one month to two years in the future. Fears of a deep recession have surged in recent months as the Fed hikes interest rates in a bid to cool inflation. Investors believe the Fed risks “overtightening” monetary policy in reaction to higher prices and driving the economy into a sustained downturn.The Fed has implemented super-size three-quarter-point interest rate hikes at each of its last three meetings, with a fourth major increase expected when policymakers hold a two-day meeting Nov. 1-2.
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