London Daily

Focus on the big picture.
Tuesday, Feb 24, 2026

Deutsche Bank Predicts U.S. Recession in ‘23 as Fed Boosts Rates

Deutsche Bank Predicts U.S. Recession in ‘23 as Fed Boosts Rates

The U.S. will tumble into a recession next year as the Federal Reserve jacks up interest rates to combat high and widening inflation, Deutsche Bank economists David Folkerts-Landau and Peter Hooper said in a report on Tuesday.
Less than a month after saying the U.S. would experience a “mild” recession, Deutsche Bank has doubled down, saying the recession will be worse than it previously imagined.

In the latest edition of “What’s in the tails?” Deutsche Bank Research economists David Folkerts-Landau, Peter Hooper and Jim Reid wrote how Fed Funds and the ECB rate may have to go higher than the consensus believes and that, as a consequence, the upcoming recession could be more severe than even sceptics believe.

The bank now expects “a major recession” in late 2023 to early 2024, according to a Tuesday note to investors titled “Why the coming recession will be worse than expected.” Although the bank predicts the economy could pick up in mid-2024, things will get worse before they get better, according to the report.

The bank had previously raised eyebrows in early April as the first major bank to predict a recession would hit the U.S. by late next year. The Tuesday report, written by a team led by Deutsche Bank’s chief economist and head of research David Folkerts-Landau, questions why other major banks maintain rosier projections for the U.S. economy.

“I am very surprised we are the extreme outlier on the street,” Folkerts-Landau writes in the report. “Given the macro starting point, my view is that the burden of proof should be on why this boom/bust cycle won’t end in a recession.”

In a report on April 5, the bank said that the country would enter a “mild” recession late next year because of a number of factors, of which rising inflation was the most important.

The only way to minimize the detrimental impact of prolonged inflation is “to err on the side of doing too much,” which means the Fed must rapidly increase interest rates, Folkerts-Landau wrote in the Tuesday report.

Deutsche Bank is among the most bearish of the major banks when it comes to its recession prediction. Goldman Sachs put the odds of a recession within the next two years at 35% while Morgan Stanley’s chief investment officer wrote last month that her team was “far from calling a U.S. recession.”

Inflation has plagued the U.S. economy since last year, most recently hitting a four-decade high of ​​8.5% last month compared to a year ago after hitting 7.9% in February, according to the U.S. Bureau of Labor Statistics’ April report on the consumer price index. For six straight months, inflation has been higher than the Federal Reserve’s 6% target—its ultimate goal is 2%. But the Fed has tried to combat surging prices by raising interest rates. The central bank raised rates in March, and Fed Chairman Jerome Powell said last week that a half-point increase in rates was “on the table” for next month.

Although the Fed is attempting to tackle inflation, Deutsche writes in the report that the central bank has never before been able to correct course even when it missed its employment objectives or inflation goals by smaller margins.

“The Fed has been slow to catch up with these developments and finds itself both well behind the curve and with less leverage than in the past to deal with the problem,” the report states.
Newsletter

Related Articles

0:00
0:00
Close
Lord Mandelson Condemns Arrest as Driven by ‘Baseless Suggestion’ He Would Flee Abroad
Former UK Ambassador Released on Bail Following Arrest in Epstein-Linked Investigation
UK Parliament Orders Release of Former Prince Andrew’s Government Vetting Files
Reddit Fined £14 Million by UK Regulator Over Failures in Age Verification Controls
UK Moves to Tighten Regulation of Netflix, Disney+ and Prime Video Under New Media Rules
British Woman Who Reported Rape in Hong Kong Faces Possible Prosecution
UK Sanctions New Zealand Insurer Maritime Mutual Following Allegations Over Russian Oil Cover
Reform MP Danny Kruger Condemns UK’s ‘Unregulated Sexual Economy’ in Call for Tougher Controls
UK Sanctions Russian ‘Illicit Oil Traders’ After Email Blunder Exposes Sanctions Evasion Network
Russia Amplifies Baseless Claims That UK and France Plan to Arm Ukraine with Nuclear Weapons
UK Imposes Sanctions on Two Georgian Television Channels Over Alleged Russian Disinformation
United States National Parks See Noticeable Drop in Visitors from Canada, U.K. and Australia
UK, Australia, Canada and New Zealand Escalate Sanctions on Russia as Ukraine War Marks Four Years
I Gave Andrew a Nude Massage Inside Buckingham Palace
UK Economy Faces Acute Strain as Trump’s Global Tariff Reshapes Trade Landscape
UK Signals Retaliation Is Possible as New US Tariff Policy Threatens Trade Stability
British Police Arrest Former Ambassador Peter Mandelson in Epstein-Related Misconduct Probe
Australia Officially Supports Proposal to Remove Andrew Mountbatten-Windsor from Royal Succession
Victorian Premier Jacinta Allan remains silent on ISIS brides' resettlement plans in Melbourne
Former UK Ambassador Peter Mandelson Arrested in Connection with Jeffrey Epstein
Jacob Rees Mogg afraid to talk about Peter Mandelson arrest on “suspicion of misconduct in a public office” (Pedophilia, corruption, etc.)
United Nations Calls for Global Action Against Disinformation and Hate Speech Online
Tucker Carlson warns of an inevitable clash in Western societies over mass migration
President Trump warns countries against abandoning recent trade deals with the US
Diverging Polls Show Mixed Signals on UK Economic Revival as Confidence Remains Fragile
Spotify Expands AI-Driven ‘Prompted Playlists’ Feature to the United Kingdom and Other Markets
Greens and Reform UK Surge in Manchester By-Election, Threatening Labour’s Historic Stronghold
UK Businesses Push for Closer European Trade Links Amid Renewed US Tariff Uncertainty
Deloitte Global Overhaul Sparks Leadership Contest in the United Kingdom
University of Kentucky and Microsoft to Showcase Campus-Wide AI Innovation
UK Food System Faces Acute Vulnerability to Shocks, Experts Warn
Reform UK’s Proposed ICE-Style Deportation Scheme Triggers Sharp Backlash
U.S. Global Tariff Push Leaves Britain, Australia and Others Facing Higher Costs and Trade Strain
UK Police Officers Guarded 2010 Epstein Dinner Attended by Prince Andrew, Reports Say
US Trade Representative Affirms Commitment to Existing Tariff Agreements with UK and Other Partners
Activists at the Louvre hung a framed Reuters photograph of Andrew Mountbatten-Windsor slumped in the back of a car leaving a police station on the day of his arrest
The royal biographer said that he expected the police to 'look at the money trail' - including Sarah Ferguson borrowing money from Epstein
A Protestor screams in NYC: “Bill Gates is on the Epstein’s List…”
FBI and Secret Service Hold Press Conference After Shooting Incident at Mar-a-Lago
Mark Zuckerberg Testifies in Trial Over Social Media's Impact on Children's Mental Health
Maggie Oliver exposes Keir Starmer using letters to close child rapists investigations
Kouri Richie's wrote a children’s book to help her sons grieve the death of their father. Now she’ll stand trial for his murder
New York Braces for Major Snowstorm With Up to 18 Inches Forecast and Blizzard Warnings Issued
Mexican Military Kills CJNG Leader Nemesio Oseguera Cervantes as Violence Erupts Across Jalisco
Metropolitan Police Deploys Palantir-Powered AI to Flag Potential Officer Misconduct
UK Parliament Rebukes Police Over Ban on Israeli Football Fans
Britain Emerges Among a Small Group of Nations Without a Religious Majority
UK’s Manufacturing Base at Risk as Soaring Energy Costs Weigh on Industry
Matt Goodwin’s Unconventional Campaign for Reform UK in the Gorton and Denton By-Election
US Military Movements in the UK Spark Speculation Over Preparations Related to Iran Tensions
×