Two-thirds of top economists at the United States’ largest financial institutions are predicting a recession in 2023, according to a survey conducted by the Wall Street Journal.

Primary concerns cited in the survey of 23 primary dealers, including those from Barclays PLC, Bank of America Corp, TD Securities, and UBS Group AG, were a dwindling of pandemic savings, a decline in the housing market, and a tightening of lending rules as potential warning signs of an incoming recession.

The prediction follows a year of soaring inflation, accompanied by rapid interest rate hikes by the Federal Reserve that have risen from nearly zero in March, to 4.5 percent by the year’s end. The Federal Reserve reportedly plans to continue its increase to 5 percent, then 5.5 percent in 2023.

Economists predict that this will force unemployment rates above five percent, resulting in millions of Americans losing their jobs.

The central bank doesn’t forecast a decline in interest rates until 2024 at the earliest, as it attempts a balancing act of attempting to lower inflation levels without triggering a recession.

Inflation began to increase at the beginning of 2022, rising at its fastest pace in 40 years. It currently sits at three times the government’s preferred rate of two percent.

Americans’ savings during the pandemic from decreased spending and government stimulus measures have started to dwindle, as consumers increasingly dig into weather rising prices of most products, from groceries to gas.

Households have also increasingly had to take out lines of credit to afford their lives, as total household borrowing increased by $351 billion between the second and third quarter, to a total of $16.51 trillion, the fastest increase in 14 years.

The high-interest rates have hit the housing market particularly hard, as mortgage rates continue to soar and home sales plummeted.

Banks have also significantly tightened their lending standards, more often than not an indicator of an incoming recession.

Out of the 23 primary dealers surveyed, only five believed that there would not be a recession: Credit Suisse Group AG, Goldman Sachs Group Inc., HSBC Holdings PLC, JPMorgan Chase & Co, and Morgan Stanley.

Jeremy Schwartz, Senior US Economist at Credit Suisse, one of the five banks that didn’t predict a recession, wrote of the outlook for 2023, “Several historically reliable lead indicators are sending recession signals, but in our view these measures are unable to correctly gauge recession risk in the current environment.”

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