Top Economists Warn of Recession in Near Future

While the Biden administration desperately tries to assure Americans that all is well in the president’s economy, top U.S. economists are increasingly sounding the alarm bell, warning that a recession may not only be likely — but inevitable.

On Thursday, the U.S. Conference Board revealed that the Leading Economic Index (LEI) fell 0.8% in June. The LEI, an average of 10 economic indicators, is designed to predict how the U.S. economy will perform in the future. A falling score — like June’s 0.8% decrease — indicates that economic downturn is more likely to occur in the near future.

To make matters worse, June was the fourth straight month of LEI decline. The 0.8% decrease was also slightly worse than the 0.6% a group of economists polled by the Wall Street Journal expected.

Ataman Ozyildirim, senior director of economic research at the Conference Board, said the picture painted by the falling LEI is as clear as it is unsettling.

“Amid high inflation and rapidly tightening monetary policy, the Conference Board expects economic growth will continue to cool throughout 2022,” Ozyildirim said. “A U.S. recession around the end of this year and early next is now likely.”

In the past week, a number of top financial executives echoed the Conference Board’s dire assessment. Tim Quinlan, senior economist at Wells Fargo, said the new data “makes it harder to avoid” a recession, while Goldman Sachs CEO David Solomon argued that “chances are high” the U.S. experiences an economic downturn in the near future.

“Anytime you have high inflation and go through an economic tightening, you wind up having some sort of economic slowdown,” Solomon said. “So I think the chances that we have a recession are high.”

Solomon’s warning about the dangers of high inflation comes as the U.S. continues to suffer from the highest levels in four decades. In June, inflation rose from 8.6% to 9.1% — the highest number seen since Nov. 1981.

In an interview Wednesday, Solomon warned that the current inflation is “definitely not transitory,” and that “there’s a good chance that we haven’t quite reached the peak yet.”