When Does The Recession Begin? Here Is What Wall Street Thinks

Last week we showed that with the Bloomberg Economics team now modeling in virtual certainty of a recession in the next 24 months…

… and with consensus now expecting Fed rate hikes to peak in Q4 and rate cuts to begin in Q1 2023…

… the only question is of timing: just when does the recession begin?

To answer that question, we go to the latest survey of Wall Street professionals conducted by DB’s Jim Reid whose preliminary results were released today, and which finds that “the risk of a US recession by the end of 2023 has only been building in recent months with 88% of you now thinking it happens by the end of 2023 up from 78% last month.” Interestingly still only 17% believe the recession starts this year, but this is up from 13% last month and virtually 0 in February, so as Reid notes, “the market narrative of a more imminent recession has moved quicker than the responses.” Also worth noting: just 8% now expect no recession until 2024, down from a near majority (45%) in February.

That said, of these respondents, over a third (~6% of the total responses) believe the recession has already started. And while Reid still thinks 2023 is more likely than 2022 (“but it’s clear the risks are building”), we have claimed since last December that the recession is a 2022 calendar event and a few more catastrophic data points such as the latest guidance cut by RH, just three weeks after its last guidance cut, will make a 2022 recession consensus, which in turn will only accelerate the timeline on the Fed’s rate cuts and QE.