Topline

Some 47.5% of economists believe the economy is headed toward recession, according to a new Bloomberg survey released Friday, a 17.5% jump from last month as soaring inflation and widespread layoffs fuel recession fears.

Key Facts

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Economists estimated second-quarter growth will shrink to 0.8%, down from optimistic estimates of 3% a month ago, according to a new bloomberg survey of 34 economists conducted between July 8 and 14.

Not surprisingly, the survey — which was released two days after a Bureau of Labor Statistics report found year-over-year inflation hit a 40-year high when it spiked to 9.1% last month — marked a significant rise in the fear of recession, from 30% odds in June and 20% in March.

Economists estimated US gross domestic product will average 2.1% through the end of the year — a 0.5% drop from the 2.6% predicted a month ago — while 2023 is expected to plummet to 1.3%.

The survey results come two days after Bank of America warned a “mild recession” could come as early as this year — the latest in a list of banks and financial institutions to forecast a recession.

Key Background

Deutsche Bank, Goldman Sachs, Moody's Analytics and Japanese investment bank Nomura all predict a mild or severe recession, as inflation hits a 40-year high. Nomura warned one reason could be a perceived over-adjustment to inflation from the Federal Reserve, which raised interest rates last month by 75 basis points, the steepest hike in nearly 30 years. Last month, economists at S&P Global Ratings forecast a 2.4% drop in GDP by the end of 2022, a reversal from February forecasts of 2.4% growth.

Contra

Despite the warning signs, President Joe Biden is not convinced a recession is inevitable. Biden blamed the Covid-19 pandemic, rising gasoline prices and economic volatility as the reasons why Americans are feeling "really, really down," in an interview with the Associated Press on Thursday, adding "we're in a stronger position than any nation in the world to overcome this inflation."

Big Number

20%. That's the percentage of workers the New-York based non-fungible token (NFT) company OpenSea laid off on Wednesday over fears of “broad macroeconomic instability” and “prolonged downturn,” — the latest in a slew of mass-layoffs from US companies ranging from tech, to auto rentals, banks and mortgage lenders. Some 244,000 people applied for unemployment benefits last week, an eight month high, according to a Department of Labor report released Thursday.

Bank Of America Becomes Latest Financial Institution To Forecast Recession (Forbes)

Odds of US Recession Within Next Year Near 50%, Survey Shows (Bloomberg)

Recession Fears Fuel Layoffs: Here Are The Major US Ones So Far (Forbes)