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US economy could be headed toward recession, economist warns: '100% odds' of global slowdown
Bank of America CEO on recession fears
Bank of America CEO Brian Moynihan provides insight on ‘Mornings with Maria’ from the World Economic Forum in Davos, Switzerland.
The U.S. economy could be barreling toward a recession in the next year, as persistently high inflation and an increasingly hawkish Federal Reserve weighs on growth.
Greg Daco, chief economist at EY-Parthenon, warned in a new analyst note that the odds of an economic downturn in the U.S. over the course of the next year are somewhere between 35% and 40%.
There's an even greater risk of a global downturn.
"A U.S. recession is unlikely in the very near term, but there are several uncertainties on the horizon," Daco wrote. "While I put the odds of a U.S. recession somewhere around 35-40% in the next 12 months, the odds of a material global growth slowdown are close to 100% in the next six months."
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While the U.S. economy remains strong in the interim, "cracks are starting to appear in the foundation," he wrote. Sky-high inflation, rising interest rates and depressed financial markets are likely to weigh on consumer spending in coming months. Consumer spending accounts for about two-thirds of gross domestic product, the broadest measure of goods and services produced in the nation.