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US probably heads for recession: Fortune

Updated:2023-03-24 10:16:03

FILE PHOTO: Destroyed Silicon Valley Bank logo and US flag is seen in this illustration taken March 13, 2023. [Photo/Agencies]

The US Federal Reserve, its central banking system, has to decide whether to raise interest rates to fight inflation or keep them low to help the economy, but it might be too late to avoid a recession. JPMorgan strategists think that a soft landing is unlikely.

This month, Silicon Valley Bank in the country failed, which was followed by Signature Bank. The US government stepped in to make sure that people with accounts at the two banks didn't lose their money, but other small and regional banks are still in danger.

All this could hurt the country's financial system, making it harder for people to borrow money because of pressure from markets and regulators, according to a Fortune news story published on its website on Tuesday.

JPMorgan analysts think that this could be a "Minsky moment". This is when a long period of growth ends in a big collapse. They think this could happen because of many threats, including banking crises. JPMorgan Chase is the largest bank in the US.

JPMorgan isn't the only bank to lower its predictions for the economy. Goldman Sachs, an American multinational investment bank, also said that the banking crisis could hurt US economic growth. Former US Treasury secretary Larry Summers has warned that the economy could be headed for a sudden crash.

For years, people have been saying that the long period of growth in the US would eventually lead to a big correction. In 2021, British investor Jeremy Grantham said that there was an "epic bubble" in the US economy.