Wall Street’s Economic Doomsayers See US Recession Around Corner

A small cadre of Wall Street economists who’ve been surprised by the economy’s resilience in 2023 are doubling down on expecting pain for American households and businesses in the new year.

Forecasters at Citigroup Inc., Deutsche Bank AG and Wells Fargo Securities LLC are among those reiterating predictions for a recession, even as the Federal Reserve and most on Wall Street are looking for slower but still-positive growth in 2024.

The pessimistic case: Consumers, whose spending comprises about 70% of economic activity, are running out of savings built up during the pandemic and face headwinds including student-loan repayments and a cooling job market. The impact of the Fed’s most aggressive interest-rate increases in 40 years has merely been delayed, and tighter credit conditions will pose difficulties for borrowers forced to refinance debts.

Even so, the bears say the downturn won’t be ugly like the Covid-induced one in 2020 — when unemployment soared to nearly 15% — or last long, like the 2007-2009 decline. US stocks have surged and Treasury yields have plunged in the past two months as inflation has receded and Fed officials penciled in rate cuts for 2024, leading much of Wall Street to celebrate good tidings.

Most Economists Don't Expect Recession Within 12 Months