Unceasing inflation combined with a sustained period of global unrest, rate hikes, and continuing supply chain issues will likely culminate in a recession in 2023.
A model run by Ned Davis Research predicts a 98.1% chance that a global recession is soon to occur, reports CNN. Several contributing factors such as sky-rocketing inflation, rate hikes, and the war in Ukraine are thought to be possible causes. Similar models in the past also produced high results in 2020, 2009, and 2008, all of which eventually aligned with their respective predictions.
Economists at Ned Davis Research believe that a recession could hit the entire globe in 2023. Many economists hold bleak outlooks about the future as inflation continues to rise. According to CNN, “seven out of ten economists surveyed by the World Economic Forum” also believe that a recession is somewhat likely.
Previously, many economists were reluctant to talk about an upcoming recession to keep consumer fears at bay. However, economists recently readjusted their forecasts for growth, instead predicting lower numbers that do not look favorable to consumers. They also predicted that high wages that had initially risen to accommodate inflation will also drop, making it difficult for workers to make ends meet.
Recession fears grow amid rising food and energy prices as consumers struggle with keeping up. The rising cost of living across the world could result in unrest, especially in poorer countries. From violent protests to government coups, living in an area with a state of unrest combined with a lack of food could result in a dangerous environment for a country’s citizens.
Wealthier areas may not see the same fate should a recession occur. According to CNN, seventy-nine percent of those economists surveyed believe that unrest is likely in low-income areas, and only 20% of them believe that unrest may occur in high-income areas. The difference between the low and high-income unrest predictions points out that many innocent people are at the mercy of their very own economy.
In the United States, investors have also felt the impact as the Dow Jones Industrial Average sank to its lowest level since March 2020. Successful investors are bracing themselves for a recession soon because they believe that right now, everything is pointing towards one coming up quickly. Stanley Druckenmiller, a billionaire investor, spoke to CNBC, stating, “I will be stunned if we don’t have a recession in ‘23.”
Federal Reserve officials have also given in to the idea of an upcoming recession, whereas before they were hesitant to mention the word. However, in the United States, not everything looks as dim; many positive economic indicators are still occurring. The job market in the US is the strongest it has ever been as job postings continue to flood LinkedIn and Indeed every day. Unemployment is near the lowest levels it’s ever been since 1969.
People are still spending money, despite the rising costs of living. Companies are still showing profitable results even as recession fears continue to grow. Some believe that the inflation crisis will eventually disappear, especially now as supply and demand levels off.
The researchers at Ned David who developed the latest global recession model said that the U.S. recession probability model is still relatively low. According to CNN, one of the researchers wrote in their report, “We do not have conclusive evidence that the US is currently in recession,” leaving much room for the imagination of consumers. The conflicting information still leaves room for hope for Americans this winter, especially for the upcoming holiday season.