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FameEX Hot Topics | Expert Predicts US Economy to Experience Recession by Year-End as Fed Tightening Takes Its Toll

2023-04-11 15:32:25

Luca Mannucci, the Head of Market Strategy at MPS Capital Services, has predicted a recession in the US economy by the end of 2022, with the US dollar set to decline up to 5% against other currencies in the latter half of the year. Mannucci attributes the potential downturn to the Federal Reserve's monetary policy and interest rate hikes, which could drag down the economy. He also expects the European Central Bank to increase rates by at least two quarter-points, while the US Federal Reserve is predicted to raise interest rates by an additional 25 basis points.

Mannucci's forecast concurs with those of other economists and industry experts who have similarly predicted a recession in the US. Neel Kashkari, the President of the Federal Reserve Bank of Minneapolis, warned that the current banking crisis has brought the US economy closer to a recession, while economist David Rosenberg foresees an impending recession and a "crash landing" for the US economy. Similarly, gold investor Peter Schiff cautions that the US could experience a "much more severe recession" than the Federal Reserve recognizes, while Jeffrey Gundlach, the billionaire "bond king," envisions "painful outcomes" in the upcoming recession.

Mannucci also warns that the failures of several regional US banks, along with the issues faced by Credit Suisse, could result in tighter credit conditions, negatively impacting the economy. He expects the US dollar to depreciate by about 3% against the euro due to the Federal Reserve's interest rate hikes, noting that the Bloomberg Dollar Spot Index has already decreased by 1.6% this year and fallen by approximately 10% since September's record high.

MPS Capital Services is an Italian corporate and investment bank that forms part of the banking group including Banca Monte dei Paschi di Siena SpA. Mannucci's market strategy expertise, coupled with his insights into the US economy and dollar, provide valuable predictions for businesses and investors alike.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.

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