Analysts at Germany’s Deutsche Bank (DB) are warning that there’s a 50-50 chance the U.S. economy falls into a recession this year.
In a new survey of 400 respondents taken between March 17 and 20, Deutsche Bank found that the chances of the U.S. economy slipping into a recession in coming months is about 50%.
While unemployment in America remains low and the economy continues to grow, the survey found that consumer and business sentiment is deteriorating, which could lead to less spending.
The new outlook from Deutsche Bank comes days after the U.S. Federal Reserve acknowledged worries about a possible recession but said the American economy remains “strong overall.”
Despite those comments, the U.S. central bank lowered its growth forecast for this year and raised its outlook for inflation.
The central bank now expects the U.S. economy to grow 1.7% this year and for core inflation to increase to 2.8% in 2025. That would be above the Fed’s 2% inflation target.
The combination of higher inflation and slower growth raises the spectre of stagflation, a phenomenon not experienced in the U.S. since the early 1980s.
Most economists see stagflation, which is when prices rise as economic growth stagnates, as a worst-case scenario for the U.S. economy.
The Deutsche Bank report stresses that the odds of a U.S. recession this year are steadily growing.
The stock of Deutsche Bank has risen 44% this year as investors shift capital to European securities. The company’s shares currently trade for $24.76 U.S. each in New York.
