Federal Reserve Signals Potential US Recession Amid Tightening Credit

The Federal Reserve System in the United States has signaled that a recession is likely to begin within the current year. This assessment appears in documents released on the organizer’s site following the recent policy meeting. The written material explains that further tightening of bank lending conditions, layered on top of already tight financial conditions, could produce a moderate recession that starts by year-end. The forecast also projects a decline in GDP during the fourth quarter of 2023 and into the first quarter of 2024. Industry analysts and most economists have long suggested that the odds of a slowdown in the United States this year are substantial. Yet officials remain cautious, stressing that while the risk exists, it is not deemed high by most measures. In remarks delivered on June 24, Treasury Secretary Janet Yellen emphasized efforts to reduce the chance of a recession but warned that such a risk cannot be dismissed outright. She also pointed to the ongoing impact of the Federal Reserve’s recent rate increases as a factor shaping the outlook. Earlier comments had already acknowledged the potential for a global downturn, underscoring the interconnected nature of the world economy and the ripple effects across major markets. These positions reflect a careful balance between concerns about growth and the continued resilience observed in many sectors.