According to Bloomberg Economics, the news agency’s economic measurement, analysis and projections arm, the United States will experience a recession in the next 12 months has peaked, the probability went up to 100 percent.
The economic forecast is overwhelming: there is no longer any chance that the largest economy on the planet will avoid recession. The Fed is willing to “pull the trigger” with greater force for its monetary policy meetings in November and December and trigger two rate increases of 75 basis points each, to control inflation in the first instance and then gradually bring it down.
The way is long
Bloomberg assures that the Fed has not really misled anyone, Jerome Powell himself has gone so far as to say that he will not rest until the task is completed, and several other members have said that the Fed’s job is far from over; in fact, it’s just beginning.
If that is true, then we are effectively in a scenario in which there are still many episodes to tell, and it is highly likely that one of them will be the recession, which according to Bloomberg is already inevitable.
It is not the first time that the high possibility of the United States entering a recession has been warned, but the study carried out by Bloomberg is usually of high quality and consulted by many in the markets, as well as being highly accurate.
This is the first time that a professional analysis house releases an analysis with virtually certainty that the following year the United States will enter an economic recession.
Chance shot up
Just last July the same analysis indicated that the probability of a recession in the United States was 65 percent, already high for the dates. Since then it was rightly warned that the risk would increase, which finally happened. Now in the new model, the phenomenon already looks inevitable; that is, at some point in the next 12 months, even without official recognition, the world’s largest economy will experience a recession. It may be one more recession, or it may be a memorable phenomenon, that is the great unknown.
A separate survey by the same agency of 42 global finance economists, however, predicts that the probability of a recession in the next 12 months is now 60 percent, up from 50 percent the previous month. This survey does not show the roundness of the model prepared by the Bloomberg economists, although it is also very high and shows signs that it will continue to rise, according to the expectations of the same analysts.
A model and some elections
The model used by Bloomberg Economics uses 13 macroeconomic and financial indicators to predict the probability of a recession over horizons ranging from one month to two years.
On this basis, the probability of a recession within 12 months reached 100% according to the model. Likewise, the chances of a recession occurring sooner also increased. The model indicates that the probability of a recession within 11 months is 73%up from 30% previously, and the 10-month probability rose to 25% from 0% in the July study.
These forecasts are like a bucket of cold water for President Joe Biden with only three weeks to go before the elections for the House of Representatives and the Senate. The US president has focused on strong job growth as a campaign banner to boost his party, but what is coming is not exactly the best for the country’s economy, because a recession will surely include an increase in rates of unemployment.
In this context, economists ask themselves a key question:how deep and long will the coming recession be? Many things depend on that, economically, politically and socially.
Mexico will continue with its optimism
What is going to happen in Mexico is obvious, there is no other place where the economy of our country can be directed. The problem is that the official speeches deny everything and, in fact, acknowledge their boundless optimism.
It is true that the rulers should be optimistic in general terms, but trying to deny the obvious does not help the country either.
It’s simple: If the US economy will fall into a recession at some point in the next 12 months, the Mexican economy will fall into a recession at some point in the next 12 months. It is unavoidable.
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