Odds that the U.S. economy falls into a recession this year are now 50-50, according to Deutsche Bank (DB).
In a new survey of 400 respondents taken between March 17 and 20, Deutsche Bank found that the chances of the U.S. economy slipping into a recession in coming months is about 50%. While unemployment remains low and the economy continues to grow, the survey found that consumer and business sentiment is deteriorating, which could lead to less spending.
The new outlook from Deutsche Bank comes days after the U.S. Federal Reserve acknowledged worries about a possible recession but said the American economy remains “strong overall” and has made “significant progress” on the inflation front over the past two years.
Growing Uncertainty
Despite those comments, the U.S. central bank lowered its growth forecast for this year and raised its outlook for inflation. The Fed now expects the U.S. economy to grow 1.7% this year and for core inflation to increase to 2.8% in 2025. That would be substantially above the central bank’s 2% inflation target.
The combination of higher inflation and slower growth raises the specter of stagflation, a phenomenon not experienced in the U.S. since the early 1980s. Most economists see stagflation, which is when prices rise as economic growth declines, as a worst case scenario for the U.S. The Deutsche Bank report stresses that the odds of a U.S. recession this year are steadily rising.
Is DB Stock a Buy?
The stock of Deutsche Bank has a consensus Moderate Buy rating among 11 Wall Street analysts. That rating is based on nine Buy, one Hold, and one Sell recommendations issued in the last three months. The average DB price target of $24.08 implies 2.67% downside risk from current levels.
