Is the Worst Over for the U.S. Economy? Deutsche Bank Says Yes!

On Monday, Deutsche Bank DB reportedly said it no longer expects a recession in the U.S. in FY24.

The bank is bullish, given the cooling inflation and the labor market returning to a “better balance” without a significant rise in unemployment, said Reuters.

Deutsche Bank earlier expected the economy to enter a mild recession this year as the Federal Reserve tightened interest rates to tackle inflation.

The bank now expects the U.S. economy to grow by 1.9% in FY24, on a quarterly average basis, versus the prior growth forecast of 0.3%.

On the other hand, the bank still expects the Fed to start easing interest rates from June, with projected rate cuts of 100 basis points this year (vs. earlier expectation of 175 bps).

“Though the economy continues to face several headwinds – namely, still-tight credit conditions, rising consumer delinquency rates, and a slowing labor market – the resilience to date points to a more benign slowdown in 2024 than we had previously projected,” the report cited Matthew Luzzetti, the brokerage’s chief U.S. economist.

As per the report, the U.S. economy witnessed growth of 3.3% in the fourth quarter, thanks to strong consumer spending leading to an increase of 2.5% in FY23.

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