Recession ‘pretty likely’ in US: Ex-Fed president
The former president of the New York Federal Reserve has said that a recession is "pretty likely" in the United States in 2023.
William Dudley warned on Tuesday that the result of the US central bank's new measures will be a recession.
“A recession is pretty likely just because of what the Fed has to do,” Dudley said in an interview with Bloomberg. “But what’s different this time I think is that if we have a recession, it’s going to be a Fed-induced recession and the Fed can end the recession by subsequently easing monetary policy.”
However, Dudley downplayed the severity of the recession, giving assurance that the needed corrections would be made in due time as the Fed would be the one engineering any cutback in activity. “I don’t think that there’s a big risk of a financial-instability cataclysm that pushes the economy into a deep recession.”
Dudley’s prediction about the US recession comes as a Wall Street Journal survey found that two-thirds of economists believe that a slowdown is on the horizon.
Meanwhile, the Fed Reserve has raised interest rates, saying it will continue down that path as one of its measures to bring down inflation, with the ultimate goal of bringing it down to 2 percent over the next few years.
Bank of America chief economist Michael Gapen said the risk of the US economy falling into a recession is high and that 2023 could be a difficult year for the country.
“I think we're in a situation where the risk of recession is high, may not be a deep and prolonged one. But we're in a situation where the economy has recovered very rapidly from- from COVID, and it's come with a lot of inflation. And the Federal Reserve is trying to slow down the economy, to bring inflation down,” Gapen said on Sunday.
“And in the past, more often than not, that's coincided with some sort of recession in the US economy and the US labor market. It's not baked in. It's not for certain. We may be able to avoid it, but I would agree that the outlook by most people who sit in the position that I do think 2023 could be a difficult year for the US.”
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