NABE Policy Survey anticipates recession in US

By Al Mayadeen English
Source: Agencies
27 Mar 2023 10:30
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A majority of US economists agree that the US is heading toward a recession and that inflation will continue well into 2024.

Cash is fanned out from a wallet in North Andover, Massachusetts, June 15, 2018. (AP)

The majority of economists predict that a recession is imminent in the US as the country is set to face high inflation well into 2024.

Over two-thirds of economists responding to the National Association for Business Economics (NABE) Policy Survey anticipated inflation would remain above four percent until the end of 2023.

The survey entailed responses from about 217 NABE members compiled between March 2 and March 10, the organization said in a statement.

The US Federal Reserve hiked interest rates by 4.75 percentage points in an effort to combat increasing inflation, which hit its highest level in decades last year.

Price increases slowed somewhat in February to an annual rate of 6.0 percent, substantially over the Federal Reserve's long-term target of two percent.

Amid the grim economic prediction, there was some good news: Only 5% of respondents believe the US is now in a recession, a number "far fewer" than the 19% in the previous economic poll, NABE president Julia Coronado said in a statement.

US capitalism is ‘breaking down before our eyes’: Griffin

The founder of the Citadel hedge fund, Ken Griffin, said the rescue plan for Silicon Valley Bank revealed by US regulators shows American capitalism is "breaking down before our eyes".

Griffin told the Financial Times that the US government should not have intervened to safeguard all SVB depositors following the bank's collapse.

In an interview on March 14, Griffin said that “the US is supposed to be a capitalist economy, and that’s breaking down before our eyes,” adding that after US regulators pledged to protect all depositors in SVB — even those with balances above the $250,000 federal insurance limit, “There’s been a loss of financial discipline with the government bailing out depositors in full."

SVB was shut down by US regulators after customers raced to withdraw $42 billion — a quarter of the bank's total deposits — in one day, and a failed attempt to raise fresh capital cast doubt on the lender's survival, according to the Financial Times.

According to the billionaire Citadel founder, whose fund became the most successful hedge fund firm this year, the strength of the US economy meant the US government did not have to act forcefully. “It would have been a great lesson in moral hazard,” he said. “Losses to depositors would have been immaterial, and it would have driven home the point that risk management is essential.”

He added that credit losses have been minimal, and bank balance sheets are at their strongest ever: "We can address the issue of moral hazard from a position of strength.”