Fitch Ratings slashed its estimate for economic growth this year from 2.9% to 1.7%, and now predicts that the U.S. economy will fall into a mild recession by the middle of 2023.
“This reflects a lagged impact of aggressive Fed tightening, the drag on real wages from high inflation and knock-on impacts from the downturn in Europe,” the report reads, according to The Hill.
Fitch said that economic conditions will be similar to those in 1990, when the U.S. experienced a brief recession driven by high oil prices and interest rate hikes by the Federal Reserve, which was concerned about inflation. It forecasts unemployment rising to a cyclical peak of 5.4%, or 1.9% above its level as of September.
Other analysts have recently indicated that the odds of a recession are rising, with a Bloomberg Economics model now calling a downturn within one a year a 100% certainty. Goldman Sachs CEO David Solomon warned Tuesday that businesses should be “cautious” in the current environment. “I think you have to expect that there’s more volatility on the horizon now,” he told CNBC. “That doesn’t mean for sure that we have a really difficult economic scenario. But on the distribution of outcomes, there’s a good chance that we have a recession in the United States.”