The odds that the United States will experience an economic recession sometime next year have reached a 40-year high, according to an odds model created by the New York Federal Reserve. There is currently a 68.2% chance, the highest level since 1982, which means that it has far surpassed the peak it reached in November 2007, just before the 2007 financial crisis when it was at 40%.
The model is based on an analysis of the difference between three-month and ten-year U.S. Treasury bonds. In recent months, projections have revealed a slowdown in GDP growth and problems in the labor market. In addition, the problems posed by the collapse of Silicon Valley Bank, which is already causing a mild recession, are having a considerable effect. Former Treasury Secretary Larry Summers believes that the odds of a recession are "probably 70%." "The probability of a recession starting this year in the U.S., or in the next twelve months is about 70%," Summers said in an interview in Foreign Policy. "When you put together the mismatches associated with monetary policy, the risks of the credit crisis, the needs to contain inflation, the risk of geopolitical or other shocks affecting commodities, 70% would be the range I estimate."
This is bad news for President Joe Biden and his economic management, not to mention the lack of control at the country's southern border with the massive influx of illegal immigrants, which is another one of the serious problems that concern citizens. The study released by the Federal Reserve comes after a CNBC survey last month that found that 70% of Americans admit to feeling stressed about their personal finances while another 58% say they are living paycheck to paycheck.
With all this bad news, economists are fearful and their insecurities are growing. A report from last April found that small businesses, the backbone of any national economy, are filing for bankruptcy at a record pace, faster than they did in 2020 during the worst period of the Covid-19 pandemic.
