The U.S. economy is very likely to shrink this year and next, an economic model used by the Federal Reserve Bank of New York indicates.
The model predicts the economy will shrink 0.6 percent this year and 0.5 percent next. This is considerably more pessimistic than the outlook in March, when the model predicted the economy would grow 0.9 percent this year and 1.2 percent in 2023.
“According to the model, the probability of a soft landing — defined as four-quarter GDP growth staying positive over the next ten quarters — is only about 10%,” the economists who manage the model wrote in a blog post on the bank’s Liberty Street Economics website. “Conversely, the chances of a hard landing — defined to include at