According to recent Bloomberg Economics model forecasts, there is now a 100 percent chance the United States will enter a recession over the next 12 months.
A prediction which, if proven true, will deal a major blow to President Joe Biden’s political fortunes ahead of the November midterm elections.
Bloomberg economists’ newest recession probability models foresee a greater recession chance across all timeframes, with the 12-month projection of a downturn by October 2023 nearing 100%, up from 65% in the previous update.
The prognosis will be disappointing news for Biden, who has consistently stated that the United States could somehow escape a recession and that any slowdown will be “very modest,” as he attempts to convince Americans that the economy is on firm footing under his administration.
Tightening financial conditions, persistent inflation, and predictions of a hawkish Federal Reserve pushing through with rate rises raise the likelihood of a recession.
A separate Bloomberg survey of 42 experts expects a 60% chance of a recession in the next 12 months, up from 50% a month ago.
Inflation, which has been approaching a four-decade high, has hampered Democrats’ chances in an election where surveys show the economy is voters’ main concern.
The estimates stand in stark contrast to Biden’s optimistic tone.
While the model predicts a recession within 12 months, the likelihood of a recession occurring sooner is also increasing. The model predicts a 73% chance of a recession within 11 months, up from 30%, and a 25% chance within 10 months, up from 0%.
Bloomberg Economics discovered that the deterioration in the prognosis was caused by a broad-based decline in the economic and financial variables used as inputs to the model.