The odds that the United States will experience an economic recession sometime next year has reached a 40-year high, according to an odds model created by the New York Federal Reserve. This now stands at 68.2%, the highest level since 1982, which means that it has far surpassed the peak it reached in November 2007, just before the 2007 credit crisis when it stood at 40%.
The model is based on the analysis of the difference between three-month and ten-year U.S. Treasury bonds. In recent months, projections have announced a slowdown in GDP growth and problems in the labor market. Add to this the problems posed by the failure of Silicon Valley Bank, which is already causing a mild recession. Former Treasury Secretary Larry Summers has also expressed his opinion 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."
President Joe Biden has bad news piling up regarding his economic management, not to mention the lack of control at the country's southern border with the massive arrival of illegal immigrants, which is another of the serious problems that concern citizens. The study just released by the Federal Reserve follows a CNBC survey last month that found 70% of Americans admit to feeling stressed about their personal finances, and another 58% say they are living paycheck to paycheck.
As the bad news comes faster and faster, the fears and insecurities of the main economic players grow. It's like a fish that bites its own tail. A report 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, at the worst time of the coronavirus pandemic.
