The stubbornly-high inflation, the Fed’s persistent interest rate hikes to tame it, and softening demand have created a Lollapalooza effect, dragging the economy downward. As a result, the stock market has been witnessing significant volatility.
With a soft landing for the economy increasingly going out of the equation, economists, on average, set the probability of a recession in the next 12 months at 63%, up from 49% in July’s survey. Aneta Markowska, the chief economist at Jefferies LLC, expressed her concern by saying, “The coming drag from higher rates and stronger dollar is enormous and will knock off about 2.5 percentage points from next year’s GDP” growth.
