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US: The inevitable recession
Two months ago we concluded that the Fed is going to push the US economy into recession. The FOMC had finally reached the conclusion that it needed to catch up and fight inflation by taking policy rates into restrictive territory. We distinguished between exogenous and endogenous threats to the US economy. In the last two months we have gotten a sharper picture of these threats and their potential timelines. The exogenous threats to the US economy are the negative supply shocks related to Covid-19, including the most recent lockdowns in China, the Russian invasion of Ukraine, and subsequent sanctions. Our European ... (full story)