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The likelihood of a U.S. recession is climbing closer to 50%, according to a recent Deutsche Bank survey of financial market participants. The findings highlight growing concerns over economic instability as inflation, rising interest rates, and geopolitical tensions weigh on growth prospects.
The survey, which polled institutional investors and analysts, showed that 48% now expect a downturn within the next 12 months—a sharp increase from just 30% three months ago. This shift reflects deepening pessimism as the Federal Reserve maintains its aggressive monetary tightening to combat persistent inflation.
“Sentiment has deteriorated rapidly,” sa
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id Deutsche Bank’s chief economist. “Markets are pricing in not just slower growth but a genuine contraction, with risks skewed to the downside.”
Key factors driving recession fears include weakening consumer spending, declining corporate earnings, and tightening credit conditions. Meanwhile, ongoing banking sector stress and global economic headwinds further cloud the outlook.
While some analysts argue that strong employment figures could cushion the blow, others warn that job market resilience may not last if demand continues to soften. The Fed’s next moves will be critical in determining whether the U.S. economy can avoid a hard landing.
As uncertainty mounts, investors are increasingly hedging against volatility, shifting toward defensive assets like bonds and gold. The coming months will test whether policymakers can strike a delicate balance between taming inflation and preventing a deeper slump.
*—With insights from CNBC’s original reporting.*
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