Deutsche Bank Says a Recession Is Inevitable: Here's the Smartest Move Investors Can Make

The macroeconomic environment of the past few years has been unprecedented for many investors. Pandemic-era business closures pushed lawmakers to spend trillions of dollars on stimulus programs, while forcing the Federal Reserve kept interest rates near historic lows to prevent the economy from capsizing. But business closures also disrupted supply chains, creating a situation in which too much money was chasing too few goods.

As a result, inflation soared to its highest level in four decades as the effects of the pandemic faded, prompting the Federal Reserve to raise interest rates at their fastest pace since the early 1980s. Those headwinds sent the S 500 (SNPINDEX: ^GSPC) tumbling into a bear market, and the benchmark index is still down 8%. But many experts (including members of the Federal Open Market Committee) believe the abrupt tightening of credit conditions will ultimately result in a mild recession. For instance, JPMorgan Chase analysts put the odds of a U.S. recession at greater than 50% before the end of the year.

Deutsche Bank analysts echoed that sentiment in a report published last week, but with much more conviction. They believe the odds of U.S. recession during the next year are "near 100%," and the group's chief economist David Folkerts-Landau noted that it would be "historically unprecedented" to avoid a downturn given the current economic headwinds.

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Source Fool.com