Arab Press

بالشعب و للشعب
Tuesday, Aug 11, 2026

Deutsche Bank Predicts U.S. Recession in ‘23 as Fed Boosts Rates

Deutsche Bank Predicts U.S. Recession in ‘23 as Fed Boosts Rates

The U.S. will tumble into a recession next year as the Federal Reserve jacks up interest rates to combat high and widening inflation, Deutsche Bank economists David Folkerts-Landau and Peter Hooper said in a report on Tuesday.
Less than a month after saying the U.S. would experience a “mild” recession, Deutsche Bank has doubled down, saying the recession will be worse than it previously imagined.

In the latest edition of “What’s in the tails?” Deutsche Bank Research economists David Folkerts-Landau, Peter Hooper and Jim Reid wrote how Fed Funds and the ECB rate may have to go higher than the consensus believes and that, as a consequence, the upcoming recession could be more severe than even sceptics believe.

The bank now expects “a major recession” in late 2023 to early 2024, according to a Tuesday note to investors titled “Why the coming recession will be worse than expected.” Although the bank predicts the economy could pick up in mid-2024, things will get worse before they get better, according to the report.

The bank had previously raised eyebrows in early April as the first major bank to predict a recession would hit the U.S. by late next year. The Tuesday report, written by a team led by Deutsche Bank’s chief economist and head of research David Folkerts-Landau, questions why other major banks maintain rosier projections for the U.S. economy.

“I am very surprised we are the extreme outlier on the street,” Folkerts-Landau writes in the report. “Given the macro starting point, my view is that the burden of proof should be on why this boom/bust cycle won’t end in a recession.”

In a report on April 5, the bank said that the country would enter a “mild” recession late next year because of a number of factors, of which rising inflation was the most important.

The only way to minimize the detrimental impact of prolonged inflation is “to err on the side of doing too much,” which means the Fed must rapidly increase interest rates, Folkerts-Landau wrote in the Tuesday report.

Deutsche Bank is among the most bearish of the major banks when it comes to its recession prediction. Goldman Sachs put the odds of a recession within the next two years at 35% while Morgan Stanley’s chief investment officer wrote last month that her team was “far from calling a U.S. recession.”

Inflation has plagued the U.S. economy since last year, most recently hitting a four-decade high of ​​8.5% last month compared to a year ago after hitting 7.9% in February, according to the U.S. Bureau of Labor Statistics’ April report on the consumer price index. For six straight months, inflation has been higher than the Federal Reserve’s 6% target—its ultimate goal is 2%. But the Fed has tried to combat surging prices by raising interest rates. The central bank raised rates in March, and Fed Chairman Jerome Powell said last week that a half-point increase in rates was “on the table” for next month.

Although the Fed is attempting to tackle inflation, Deutsche writes in the report that the central bank has never before been able to correct course even when it missed its employment objectives or inflation goals by smaller margins.

“The Fed has been slow to catch up with these developments and finds itself both well behind the curve and with less leverage than in the past to deal with the problem,” the report states.
Newsletter

Related Articles

Arab Press
0:00
0:00
Close
AI’s Next Bottleneck Is Power, Not Just Nvidia Chips
Meta Raises AI Spending Target to as Much as $145bn Despite Pressure Over Returns
Joe Biden’s Cancer Has Spread Beyond His Bones, Hunter Biden Says
Why 2027 Could Be a Strong Year for Stocks—and Why the Forecast Is Fragile
Why Markets May Look Quiet in August After Big Tech Earnings
Trump’s Top General Seeks an Exit Strategy From Iran War, Report Says
UFO: Pentagon Releases Video of Unidentified Object Tracked Over Middle East
Ukraine Tells Senate Republicans Its Drone War Offers a Blueprint for America
Weight-Loss Drug Boom Tests the Limits of Prescription Advertising Rules
Saudi Arabia, Turkey and Pakistan Sign Mutual-Defence Pact
AI Is Remaking the US Economy, From GDP Growth to iPhone Prices
FIFA’s Retreat Leaves a Larger Question Over Who Guards the Game
Finland Deploys Commercial-Scale Thermal Batteries Using Crushed Rock to Store Renewable Grid Energy
Valued at $109 Million: F-35B Fighter Jet Crashes in Southern California
US Says It Has Carried Out Heavy Strikes on Iran After Attempted Attacks on Its Forces
Over 24 Hours in the Air: Qantas Airbus Completes Record-Breaking Test Flight
Arrest Warrant Issued in Lebanon for Tycoon Spotted Meeting Netanyahu in Washington
Trump says Israel ‘would not survive’ without US
Nvidia Reportedly Takes Vast Texas Data-Centre Lease to Underwrite AI Expansion
FIFA’s Private-Investment Plan for World Cup Rights Draws European Revolt
Following OpenAI's Cyberattack: 'Most Companies Still Do Not Understand What Is Coming'
OpenAI Sued After ChatGPT Allegedly Discouraged Emergency Care Before Near-Fatal Embolism
Miliband Sets Climate and International Law at Centre of UK Diplomacy
Pentagon Discloses Nearly 100 US Troop Injuries During Renewed Iran Fighting
Trump Readies New Tariffs as Temporary Global Levy Nears Expiry
High Prices Push Coffee Drinkers Toward Whole Beans and Home Brewing
Trump Draws Boos and Podium Scrutiny at Spain’s World Cup Triumph
Spain Defeats Argentina in Extra Time to Win Second World Cup
Turkey Explores S-400 Transfer to UAE in Bid to Rejoin F-35 Program
US Retaliates Against Iran After Two American Troops Killed in Jordan
Proposed U.S.-Saudi Nuclear Pact Could Permit Limited Uranium Enrichment Under International Safeguards
Why Kentucky Fried Chicken Became KFC—and Why the False Explanations Persist
Iran Claims It Destroyed Bahrain’s Main Artificial Intelligence Center in Missile and Drone Strike
Ukrainian Drones Strike Wildberries Warehouses Deep Inside Russia
Reported CIA Mission Helped Clear the UAE’s Path to Advanced US AI Chips
Artificial Intelligence Capital Fuels Markets While Governments and Regulators Face Mounting Strategic Tests
China’s Moonshot’s Kimi K3 Narrows the Gap With Anthropic Through Scale, Openness and Lower Cost
The Ledger Will Not Trust on Faith
Passenger Bound for Germany Refused to Sit Beside a Woman on a Plane — Then Slapped a Flight Attendant
Ukraine’s Leadership Rift Spills Into the Streets as Protesters Target Army Chief
The Ten World Cup Finals That Defined Football History
Smartphones Are Getting More Expensive, Sales Are Collapsing, and Even Apple Admits: "Prices Will Rise"
Leadership Change and Strategic Rivalry Redraw the Political Map
The AI Race Enters Its Infrastructure Era
Britain Nationalises British Steel to Protect Scunthorpe Production and Strategic Supply
Thomas Tuchel Faces Fierce Backlash After Tactical Retreat Costs England World Cup Final Berth
A Quiet Bastille Day: France Grapples with World Cup Heartbreak and Leftover Fireworks
Spain in Ecstasy: "We Feel Unbeatable, We Taught the Whole World a Lesson"
Harvard Astrophysicist to Lead U.S. Scientific Advisory on Unidentified Aerial Phenomena
Emergency Sirens Activated Across Bahrain as Interior Ministry Issues Shelter Directives
×