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More than half of Americans fear losing everything as Biden recession fears loom

By Sarah May on
 March 29, 2023

With lingering inflation and other economic pressures showing few signs of abating under the leadership of President Joe Biden, a new survey reveals that a startling number of Americans – roughly three of every four – are concerned that the country is headed towards a recession within the year, as Fox Business reports.

Adding to those fears, according to a study conducted by Real Estate Witch, more than half of all respondents indicated a belief that they would lose everything in the type of recession they appear to expect.

Recession fears persist

As Fox Business notes, a recession is typically defined by economists as two or more consecutive quarters in which gross domestic product is marked by decline.

Though the fourth quarter of 2022 saw a GDP increase of 2.9%, the economic pessimism gripping much of the population has persisted, with 63% having a sense of foreboding about the economy's likely performance in 2023.

That feeling of gloom was further underscored late last month when The Conference Board published February's Consumer Confidence Index, which measures the level of optimism felt by consumers about their own finances.

As USA Today noted at the time, the index for February registered a nearly seven-point drop from the prior month to reach a three-month low, and Conference Board researchers attributed the dip to growing recession fears.

Experts raise red flags

According to a report from Brian Sozzi of Yahoo!Finance, talk of a recession is surging again among Wall Street prognosticators, particularly in the aftermath of several high-profile bank collapses.

Sozzi cited the most recent Bank of America fund manager survey, which suggested that the chances of recession have increased for the first time since last fall. According to the poll, roughly 42% of fund managers are of the belief that a recession is likely to take hold within the next year, an increase from 24% who thought the same back in February.

Sozzi further noted that just last week, Jan Hatzius, chief economist at Goldman Sachs, said he sees a 35% chance of a recession within the next year, whereas he previously pegged the possibility at around 25%, and he cited “increased near-term uncertainty” stemming from the recent stresses on small banks.

Ed Hyman, chairman of independent investment banking advisory firm Evercore ISI seemed to agree with the disappointing predictions, saying, “We believe that inflation is already slowing significantly and that a recession is already baked in the cake, probably starting in second half of this year.”

Banking crisis spurs volatility

The New York Times reported earlier this month that the banking crisis evidenced by the failures of Silicon Valley Bank and Signature Bank as well as the precarious state of Credit Suisse continues to threaten the stability of the U.S. economy, and the volatility is likely to continue.

Though efforts have been afoot in Washington and on Wall Street to mitigate the worst of the fallout from the meltdowns, as the Times noted, their success is far from assured, and even if they do, repercussions throughout the economy remain all but certain.

Forecasters, as a result, are suggesting that hiring and investment will assuredly begin to slow as banks put the brakes on lending, particularly to smaller businesses, all things that raise the specter of impending recession.

Jay Bryson, chief economist at Wells Fargo, told the outlet, “There will be real and lasting economic repercussions from this, even if all the dust settles well. I would raise the probability of a recession given what's happened” over the last few weeks.

Downgrading expectations

Though earlier this year, a number of forecasters were feeling more optimistic about economic growth and suggesting that perhaps recession was not as likely to take hold this year, a swift turnaround seems to have occurred this month, as the Times further noted.

Bryson, for his part, now says that there is a 65% chance of recession during 2023, up 10% from his prediction prior to the bank collapses.

As Reuters notes, growing numbers of traders are assuming that the Federal Reserve may be nearing the end of its string of interest rate hikes and also observing that the wave of optimism that came from China's economic reopening and declines in energy prices has diminished significantly.

Mike Riddell of Allianz Global Investors explained the dramatic recent change in attitude succinctly, saying, “The bigger, medium-term implication, of what's happened in the last month is that global growth will be far weaker in six months than we thought even just a few weeks ago,” but just how serious things may get and how the Biden administration will respond, only time will tell.