U.S. heading into short and shallow recession

According to economists polled by Reuters, the U.S. may find itself in a short-term shallow recession. The survey was conducted on December 2–8. The poll has also shown that there is a 60% probability of a recession next year.

Each time during four previous meetings, U.S. Fed Officials have increased the interest rate by 75 basis points. At the moment, all the polled economists strongly believe that at the next meeting on December 14 there will be a rather moderate rate hike of about 50 basis points. Thus, the rate will be around 4.25–4.50%.

Sal Guatieri, senior economist at BMO Capital Markets, notes that the U.S. has every chance of facing serious problems in case inflation remains high. On the other hand, according to new forecasts, there is still some time before these problems appear. In the current terms, the good news is that extra savings could temper the downturn.