Expectations that the recession will hit the US economy 100% within a year

In a recent report, Bloomberg Economics predicted that the global economy would almost certainly start to decline, while the research arm of Bloomberg Agency expected a recession to hit the US economy by 100% within a year.

Tight conditions, inflation and the hawkishness of the US Federal Reserve are weighing on economic conditions in the US, Bloomberg Economist said.

The report stated that a recession in the US is almost certain to be confirmed in the next 12 months in the forecasts of the new Bloomberg Economics model.

The report indicated that these expectations are a blow to President Joe Biden's economic message before the midterms (November) and the midterm elections.

The latest recession probability models by Bloomberg economists Anna Wong and Elisa Winger predict a higher recession probability on all time frames.

According to the agency, the recession comes with a 12-month estimate of contraction by October 2023 to reach 100%, up from 65% for the same period in the previous update.

The outlook will be unwelcome news for US President Biden, who has repeatedly said that the US will avoid a recession and any contraction will be too small, as he seeks to reassure Americans that the economy is there under his administration.

But tightening financial conditions, persistent inflation, and expectations that a hawkish US Federal Reserve will go ahead with rate hikes are increasing the risks of deflation in the US.

The outlook provides a sharp contrast to Biden's optimistic tone as the US president focused on strong job growth during his election campaign to help Democrats retain both House and Senate majorities in elections three weeks from now.

But inflation, near its highest level in four decades, has weighed on Democrats' election prospects as polls suggest the US economy is the most important issue for voters.

Bloomberg Economics found that the deterioration in the outlook was driven by a broad deterioration in economic and financial indicators used as inputs into the recession probability model for the US economy.