Some economists have started to see a strong possibility of recession as inflation remains high while the beginning of aggressive rate hikes is expected to slow economic growth.
As per a Mint report, "economists surveyed by The Wall Street Journal have raised the probability of recession, now putting it at 44 percent in the next 12 months, a level usually seen only on the brink of or during actual recessions."
Economists have been talking about a recession this year as inflation has shot up to multi-year high levels in major economies, prompting central banks to lift rates steeply higher.
"Economists on average put the probability of the economy being in a recession sometime in the next 12 months at 28 percent in the Journal’s last survey in April and at 18 percent in January," the Mint report further added.
As per a Bloomberg report, economists at Nomura Holdings Inc believe the US economy may fall into a mild recession by the end of 2022 as the Federal Reserve raises rates.
“With rapidly slowing growth momentum and a Fed committed to restoring price stability, we believe a mild recession starting in the fourth quarter of 2022 is now more likely than not,” Bloomberg reported, quoting Nomura economists Aichi Amemiya and Robert Dent wring it in a note.
A recession is a temporary economic phase in which trade and industrial activities decline and it is generally identified by a fall in the gross domestic product (GDP) in two successive quarters.
However, a recession is different from depression. Depression is a stronger, longer and more severe version of a recession. Recessions are mild while depressions are more severe.