So far, 2022 has been a challenging year for the stock market due to rampant inflation, the Federal Reserve’s monetary policy tightening, and geopolitical concerns. The Fed recently announced its third consecutive 75-basis-point hike and hinted at maintaining its hawkish stance until inflation comes under control. Wells Fargo analysts expect steeper rate hikes in the coming months and have forecasted the key rate to a range between 4.75% and 5.00% in the first quarter of 2023.
Therefore, the odds of the economy tipping into a recession are increasing. According to the Conference Board, the likelihood of a recession in the United States within the next 12 months has shot up to 96%. In addition, many economists expect the fourth quarter of 2022 and the first quarter of 2023 to witness weak real GDP growth.
