Yahoo Finance BofA: 'Recession fears are up in March'
Recession chatter is picking back up on Wall Street as markets deal with the blow of several bank failures and the potential economic aftermath.
The likelihood of a U.S. recession is back on the rise for the first time since November 2022, according to the latest BofA fund manager survey released on Tuesday. About 42% of fund managers surveyed see a recession happening within the next 12 months, up from 24% in February.
While fund managers aren't in universal agreement on a recession, they are almost in unison on the economy being stagnant over the next 12 months.
A whopping 80% of those fund managers surveyed expected a stagflationary economy to persist.
Stagflation is where the economy remains stagnant amid relatively high inflation.
The vibe among fund managers comes as economists begin to readjust their economic thinking post the collapses of Credit Suisse (CS), Signature Bank, and Silicon Valley Bank — which pros point out has collectively caused tightening of financial conditions.
Jefferies strategists maintained their 2023 recession call this week, citing tighter lending standards at banks as the crisis continues.
Goldman Sachs Chief Economist Jan Hatzius noted last week he sees a 35% chance of a U.S. recession in the next 12 months, up from 25% previously. The increase in odds reflects "increased near-term uncertainty" around the economic effects of small bank stress.
Hatzius also cut his 2023 GDP forecast by 0.3 percentage points to 1.2%.
"We believe that inflation is already slowing significantly and that a recession is already baked in the cake, probably starting in second half of this year," wrote EvercoreISI chairman Ed Hyman.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on the banking crisis? Email brian.sozzi@yahoofinance.com
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