The Wall Street Scare and Recessions Predictions
The recent stock market scare caused by the S&P 500 erasing trillions in hours has led big financial firms on Wall Street to reassess the likelihood of a recession in the U.S. One of these firms, JPMorgan, has increased its recession probability in the U.S. to 35% by the end of this year, up from 25% at the beginning of July.
Conversely, they now forecast a 30% chance of the Federal Reserve maintaining unchanged rates, down from 50% in the June assessment. Economists, led by Bruce Kasman, released a note to clients on August 7 regarding these changes in predictions.
Reassessment by Institutional Giants on Recession Odds
In line with JPMorgan, Goldman Sachs analysts have also raised their estimate of a U.S. recession from 15% to 25% in an analysis published on August 4. However, lead economist Jan Hatzius and his team believe that the risk is limited, as the overall U.S. economy appears to be in good shape.
If necessary, they are confident that the Federal Reserve can quickly lower interest rates by a significant margin to address any financial challenges that may arise in the future.
Factors Behind the Recession Worry Among Experts
The unemployment report for July showed a gradual increase in unemployment rates for the fourth consecutive month, reaching 4.3%, the highest level since November 2021. This surge prompted the Sahm Rule indicator to issue a warning signal.
Named after former Federal Reserve and White House economist Claudia Sahm, The Sahm Rule acts as an economic downturn indicator that utilizes monthly U.S. unemployment reports to assess the economy’s trajectory. According to the latest report, the unemployment rate rose by 0.5 percentage points above its lowest point in the past 12 months.
Hot Take: Stay Informed and Prepared
As a crypto reader, it is crucial to stay informed about the latest shifts in the financial landscape, especially concerning recession predictions. By understanding the factors that contribute to these forecasts, you can make well-informed decisions about your investments and be prepared for potential economic challenges that may arise. Keep a close eye on market trends and expert analyses to stay ahead of the curve and safeguard your financial interests.
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