Beautiful Virgin Islands

Thursday, Jan 29, 2026

Deutsche Bank Predicts U.S. Recession in ‘23 as Fed Boosts Rates

Deutsche Bank Predicts U.S. Recession in ‘23 as Fed Boosts Rates

The U.S. will tumble into a recession next year as the Federal Reserve jacks up interest rates to combat high and widening inflation, Deutsche Bank economists David Folkerts-Landau and Peter Hooper said in a report on Tuesday.
Less than a month after saying the U.S. would experience a “mild” recession, Deutsche Bank has doubled down, saying the recession will be worse than it previously imagined.

In the latest edition of “What’s in the tails?” Deutsche Bank Research economists David Folkerts-Landau, Peter Hooper and Jim Reid wrote how Fed Funds and the ECB rate may have to go higher than the consensus believes and that, as a consequence, the upcoming recession could be more severe than even sceptics believe.

The bank now expects “a major recession” in late 2023 to early 2024, according to a Tuesday note to investors titled “Why the coming recession will be worse than expected.” Although the bank predicts the economy could pick up in mid-2024, things will get worse before they get better, according to the report.

The bank had previously raised eyebrows in early April as the first major bank to predict a recession would hit the U.S. by late next year. The Tuesday report, written by a team led by Deutsche Bank’s chief economist and head of research David Folkerts-Landau, questions why other major banks maintain rosier projections for the U.S. economy.

“I am very surprised we are the extreme outlier on the street,” Folkerts-Landau writes in the report. “Given the macro starting point, my view is that the burden of proof should be on why this boom/bust cycle won’t end in a recession.”

In a report on April 5, the bank said that the country would enter a “mild” recession late next year because of a number of factors, of which rising inflation was the most important.

The only way to minimize the detrimental impact of prolonged inflation is “to err on the side of doing too much,” which means the Fed must rapidly increase interest rates, Folkerts-Landau wrote in the Tuesday report.

Deutsche Bank is among the most bearish of the major banks when it comes to its recession prediction. Goldman Sachs put the odds of a recession within the next two years at 35% while Morgan Stanley’s chief investment officer wrote last month that her team was “far from calling a U.S. recession.”

Inflation has plagued the U.S. economy since last year, most recently hitting a four-decade high of ​​8.5% last month compared to a year ago after hitting 7.9% in February, according to the U.S. Bureau of Labor Statistics’ April report on the consumer price index. For six straight months, inflation has been higher than the Federal Reserve’s 6% target—its ultimate goal is 2%. But the Fed has tried to combat surging prices by raising interest rates. The central bank raised rates in March, and Fed Chairman Jerome Powell said last week that a half-point increase in rates was “on the table” for next month.

Although the Fed is attempting to tackle inflation, Deutsche writes in the report that the central bank has never before been able to correct course even when it missed its employment objectives or inflation goals by smaller margins.

“The Fed has been slow to catch up with these developments and finds itself both well behind the curve and with less leverage than in the past to deal with the problem,” the report states.
Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
The AI Hiring Doom Loop — Algorithmic Recruiting Filters Out Top Talent and Rewards Average or Fake Candidates
UK Banks Pledge £11 Billion Lending Package to Help Firms Expand Overseas
Suella Braverman Defects to Reform UK, Accusing Conservatives of Betrayal on Core Policies
Melania Trump Documentary Sees Limited Box Office Traction in UK Cinemas
UK’s Starmer and Trump Agree on Urgent Need to Bolster Arctic Security
Starmer Breaks Diplomatic Restraint With Firm Rebuke of Trump, Seizing Chance to Advocate for Europe
UK Finance Minister Reeves to Join Starmer on China Visit to Bolster Trade and Economic Ties
Prince Harry Says Sacrifices of NATO Forces in Afghanistan Deserve ‘Respect’ After Trump Remarks
Barron Trump Emerges as Key Remote Witness in UK Assault and Rape Trial
Trump Reverses Course and Criticises UK-Mauritius Chagos Islands Agreement
Elizabeth Hurley Tells UK Court of ‘Brutal’ Invasion of Privacy in Phone Hacking Case
UK Bond Yields Climb as Report Fuels Speculation Over Andy Burnham’s Return to Parliament
Prince William to Make Official Visit to Saudi Arabia in February
Prince Harry Breaks Down in London Court, Says UK Tabloids Have Made Meghan Markle’s Life ‘Absolute Misery’
Malin + Goetz UK Business Enters Administration, All Stores Close
EU and UK Reject Trump’s Greenland-Linked Tariff Threats and Pledge Unified Response
UK Deepfake Crackdown Puts Intense Pressure on Musk’s Grok AI After Surge in Non-Consensual Explicit Images
Prince Harry Becomes Emotional in London Court, Invokes Memory of Princess Diana in Testimony Against UK Tabloids
UK Inflation Rises Unexpectedly but Interest Rate Cuts Still Seen as Likely
Starmer Steps Back from Trump’s ‘Board of Peace’ Amid Strained US–UK Relations
Prince Harry’s Lawyer Tells UK Court Daily Mail Was Complicit in Unlawful Privacy Invasions
UK Government Approves China’s ‘Mega Embassy’ in London Amid Debate Over Security and Diplomacy
Trump Cites UK’s Chagos Islands Sovereignty Shift as Justification for Pursuing Greenland Acquisition
UK Government Weighs Australia-Style Social Media Ban for Under-Sixteens Amid Rising Concern Over Online Harm
Trump Aides Say U.S. Has Discussed Offering Asylum to British Jews Amid Growing Antisemitism Concerns
UK Seeks Diplomatic De-escalation with Trump Over Greenland Tariff Threat
Prince Harry Returns to London as High Court Trial Begins Over Alleged Illegal Tabloid Snooping
High-Speed Train Collision in Southern Spain Kills at Least Twenty-One and Injures Scores
Meghan Markle May Return to the U.K. This Summer as Security Review Advances
Trump’s Greenland Tariff Threat Sparks EU Response and Risks Deep Transatlantic Rift
Prince Harry’s High Court Battle With Daily Mail Publisher Begins in London
Trump’s Tariff Escalation Presents Complex Challenges for the UK Economy
UK Prime Minister Starmer Rebukes Trump’s Greenland Tariff Strategy as Transatlantic Tensions Rise
Prince Harry’s Last Press Case in UK Court Signals Potential Turning Point in Media and Royal Relations
OpenAI to Begin Advertising in ChatGPT in Strategic Shift to New Revenue Model
GDP Growth Remains the Most Telling Barometer of Britain’s Economic Health
Prince William and Kate Middleton Stay Away as Prince Harry Visits London Amid Lingering Rift
Britain Braces for Colder Weather and Snow Risk as Temperatures Set to Plunge
Mass Protests Erupt as UK Nears Decision on China’s ‘Mega Embassy’ in London
Prince Harry to Return to UK to Testify in High-Profile Media Trial Against Associated Newspapers
Keir Starmer Rejects Trump’s Greenland Tariff Threat as ‘Completely Wrong’
Trump to hit Europe with 10% tariffs until Greenland deal is agreed
Prince Harry Returns to UK High Court as Final Privacy Trial Against Daily Mail Publisher Begins
Britain Confronts a Billion-Pound Wind Energy Paradox Amid Grid Constraints
The graduate 'jobpocalypse': Entry-level jobs are not shrinking. They are disappearing.
Cybercrime, Inc.: When Crime Becomes an Economy. How the World Accidentally Built a Twenty-Trillion-Dollar Criminal Economy
The Return of the Hands: Why the AI Age Is Rewriting the Meaning of “Real Work”
UK PM Kier Scammer Ridicules Tories With "Kamasutra"
Strategic Restraint, Credible Force, and the Discipline of Power
United Kingdom and Norway Endorse NATO’s ‘Arctic Sentry’ Mission Including Greenland
×