FameEX Hot Topics | US Economy Forecasted to Enter Recession by Year-End Due to Fed Tightening, Says Strategist

MPS Capital Services' Head of Market Strategy, Luca Mannucci, has predicted that the US will experience a recession by the end of 2022, with the US dollar likely to decline by up to 5% against other currencies in the second half of the year. Mannucci believes the Federal Reserve's monetary policy will contribute to the downturn, with interest rate hikes dragging down the economy. He also expects the ECB 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 aligns with those of other economists and industry experts who have also predicted a recession in the US. Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, says the current banking crisis has pushed the US economy closer to a recession, while economist David Rosenberg has warned of an impending recession and a "crash landing" for the US economy. Similarly, gold investor Peter Schiff predicts a "much more severe recession" for the US, while Jeffrey Gundlach, the billionaire "bond king," foresees "painful outcomes" in the next recession.

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

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

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