The United States economy is just a few months away from a "1990-style mild recession," says Fitch Ratings.
According to a recent report from Fitch, one of the world's top three credit rating groups, U.S. growth forecasts are significantly lower than anticipated due to aggressive anti-inflation policies from the Federal Reserve. As opposed to the projected 1.5% growth in gross domestic product (GDP) in June, GDP is expected to grow by just 0.5%.
Fitch notes that the cause of this loss is high inflation, which will pressure household incomes and shrink consumer spending. It will closely resemble the recession of July 1990 to March 1991, when the Federal Reserve also attempted to curb high inflation by hiking interest rates.
This forecast is just one of many warnings from economists and experts anticipating a recession. A survey from The Wall Street Journal found that the chances of a recession occurring in the next twelve months are around 63%, higher than at any time in the past two years. While Fitch notes that this recession will be mild, as consumers have lower rates of debt and stronger balance sheets, a small dip in GDP is still likely. The healthy banking system and lack of overbuilding in the housing market will also provide a softer cushion if a recession occurs.
Despite the assurances that the recession won't be too bad, a recent New York Times poll showed that 44% of voters believe that economic concerns are the most important issues facing America at the moment.
The last recession was in early 2020, when companies slashed jobs, bringing the unemployment rate to over 15%. Now, though unemployment is near an all-time low at 3.5%, Fitch anticipates that it will climb as high as 5.4% in 2024.