Experts: the US economy will face a «soft» recession next year

Experts from JPMorgan, one of the world's largest banks, predict that the policy of «tightening the screws» of the US Federal Reserve will lead the American economy to a soft recession in 2023.

The forecasts of the bank's analysts also suggest that inflation may decline even more, although at the cost of losing about 500 thousand jobs, as unemployment will rise by 5%. 

At the same time, the Federal Reserve System still has opportunities to strengthen its monetary policy. It is expected that at a meeting in December, the regulator will raise the rate by another half point, and in February and March – by 25 bps. However, such a slowdown in rate growth may slow down economic growth. So much so that it will lead to a recession.

JPMorgan is confident of one thing: the expected total rate increase of 500 bps will lead to a commensurate tightening of financial conditions. As a result, a recession will come next year. 

The Fed will continue to tighten its policy even despite the local decline in inflation last month. The fact is that on an annualized basis, the indicator is still above the level of 7.7%. In addition, hourly wage growth in the United States is currently about 5%. And this figure should approach 3.5% before the Fed feels more comfortable. At the same time, such a slowdown in wage growth will probably require a reduction in the unemployment rate from 4% to 5%.