A growing rash of economists are warning the odds of a recession have increased amid a historic inversion of the yield curve—a telltale sign of a looming economic slowdown after the Federal Reserve on Wednesday raised rates to the highest level since the Great Recession and signaled its policy would be more aggressive than previously anticipated.
Yields on the 10-year Treasury surged more than 10 basis points to nab a new 11 year-high of 3.829% on Friday, while the 2-year Treasury hit a 15-year record of 4.266%—deepening the yield curve inversion to some 50 basis points, the widest gap in more than 30 years.
Since July the yield curve has been inverted—when short-term yields fall below longer-term returns—in a sign investors are more bearish about the economy’s long-term prospects, and the inversion only deepened after the Fed on Wednesday raised rates by 75 basis points and suggested it may institute another unusually large hike again in November.
In a note to clients, analyst Tom Essaye of the Sevens Report explained the steepening inversion “makes sense” because a more aggressive Fed, and higher rates that make borrowing more expensive, will temper demand and stunt economic growth in hopes of reducing inflation, but he also warned the magnitude of the inversion has become “very concerning.”
A Federal Reserve study in 2018 found every recession in the past 60 years has been preceded by a yield curve inversion, and Essaye says the widening gap between 2-year and 10-year Treasurys is “screaming that a serious economic contraction is coming,” adding “everyone should be preparing” for a material economic slowdown in the coming months and quarters.
In a Friday note, Bank of America economists said they expect the economy will fall into a recession in the first half of next year, with real GDP falling 1% after adding 5% last year, and unemployment rising to 5.6%—potentially wiping out more than a year of job gains.
Fed officials doubled down on their most aggressive economic tightening campaign in three decades on Wednesday, raising interest rates by three-fourths of a percentage point for the third time in a row and pushing borrowing costs to 3.25%—the highest level since 2008. Though they had originally projected the federal funds rate would only climb to 3.4% this year, they now project it will climb to 4.4%, suggesting another 75 basis point hike could be on the table in November.
“With this new alignment between the Fed and markets, the questions now are when and how bad the recession will hit,” says Mace McCain, the chief investment officer of Frost Investment Advisors. Stocks plunged deeper into bear market territory after the Fed’s hawkish message, with major indexes eclipsing yearly lows on Friday. The S&P 500 is down 23% this year, and economists at Goldman project it will sink another 3% by December and could take more than a year to recover losses.
The tech-heavy Nasdaq has plummeted 32% since January, the Dow nearly 20%. “Looking out over the next one to two months, we don’t have much conviction at all on equities,” says Adam Crisafulli, founder of Vital Knowledge Media. “Sentiment is palpably horrible.” Existing home sales fell for the seventh straight month in August as rising interest rates continued to sideline potential home buyers, according to the National Association of Realtors.
In a statement, the association’s chief economist Lawrence Yun called the housing sector “most sensitive to” the Fed’s interest rate hikes and said the softness in home sales reflects this year’s escalating mortgage rates, which hit a 15-year high of nearly 6.3% this week—driving up the cost of monthly payments on new mortgages by more than 55%, an average of hundreds of dollars each month.
Despite pockets of the economy already reeling from the Fed’s hawkish policy, the job market remains firmly strong, effectively justifying the aggressive action. Initial jobless claims were little changed this week and continued claims actually edged lower. However, many experts say it’s inevitable that the labor market will soon start to cool. “It’s possible that the unemployment rate could gently glide higher and wages cool without an outright recession—but it’s never happened before,” says Bill Adams, chief economist for Comerica Bank.
Though it slowed for a second-month straight, inflation clocked in at a worse-than-expected 8.3% in August—far worse than the Fed’s long-standing target of 2%. Bank of America economists project inflation won’t return to that level until the end of 2024.
The decision by the US Federal Reserve to raise its key interest rate by another 75 basis points this week, and its plans for further increases, have raised the spectre of a global economic slowdown. Overnight, the Bank of England lifted its key rate by 0.5%, matching Indonesia and the Philippines, while the Swiss National Bank and South Africa opted for a 0.75 percentage point rise.
Tooze, a history professor at New York’s Columbia University and a frequent contributor to the Guardian, has detailed the gathering economic headwinds and has analysed for Guardian Australia the key areas of the current financial turmoil.
‘Extremely severe’ recession risk
The chances of a global recession were now “extremely severe”, as central banks in many parts of the world raise interest rates to curb inflation. “It’s the single most dramatic simultaneous tightening of monetary policy ever,” Tooze said. The winding back of Covid support packages by governments as the pandemic tide recedes also meant fiscal brakes were being tapped.
“US fiscal policy right now is massively contractionary,” Tooze said. “It’s a 4.5% of GDP negative drag.”
Textbook moment of ‘failed technocracy’
Tooze predicted the current policies of central banks and governments would be marked in future textbooks as a “classic moment of failed technocracy”. The US Fed Reserve lifted its cash rate target range by 75bp to 3% to 3.25% on Wednesday, US time. It also indicated it expected increases of as much as another 125bp this year even as Fed chairman Jerome Powell warned of a possible recession.
Tooze said other central banks will be under pressure to follow. Australia’s Reserve Bank governor, Philip Lowe, said last week the bank would probably lift its cash rate 25bp or 50bp on 4 October, making it a record six increases in as many months. The lives of 100s of millions of people and their employment prospects would be scarred by a recession, Tooze said: “This will mark those people’s lives for the rest of their lives.”
Private economists forecast Australian property price falls of as much as 20%, the steepest decline since the 1980s as rates rise. Tooze said Australia and Canada had two of the “most overheated” property markets in the world, and he predicted “huge effects” from higher borrowing costs.
One source of support for the market might also be less forthcoming in the future. The surge in both Chinese students and property buying in Australia, US and elsewhere, had partly been a “capital flight story”, he says. Buying a flat to provide accommodation while studying was one way to get money out of China.
Signs have lately been mounting of a renewed effort by Chinese to move money abroad ahead of a major Chinese Communist party meeting in Beijing next month that will formally extend the leadership of President Xi Jinping. To counter that capital flight, authorities are making it harder for people “beyond certain networks” to access passports, Tooze said. “It’s really quite difficult now for the Chinese to discreetly exit.”
The RBA deputy governor, Michele Bullock, on Wednesday described the global economy as being “on a bit of a knife-edge”. One reason was the fragile state of China’s economy. Its Covid-zero policy disrupted supply chains and a plunging property market had “still not worked itself out”, she said. Demand for Australian iron ore, in particular, hinged on the success of government efforts to support real estate.
The Chinese property bubble is not just any property bubble – it’s the largest single phase of accumulation of wealth in economic history,” Tooze said, noting the number of private property owners had jumped from near zero to 300 million in a few decades. “They poured more concrete in three years [in the early 2010s] than the United States in all of the 20th century,” he said. The Chinese government may yet stabilise the market.
“The amazing thing is that big money in the west is taking a huge gamble on the capacity of an authoritarian regime unfettered by the rule of law to pull off the largest single exercise in macro-prudential, macro-financial stabilisation the world has ever seen,” Tooze said. Assuming they can do that, BHP, Rio Tinto and Fortescue – and a large part of the Australian economy – “are all fine”.
One cause for optimism
Tooze said the “extraordinary progress” in cutting the cost of solar and wind energy was a “real case for optimism”, at least as far as action to limit global heating was concerned. “The disappointment is we could be even further down those cost curves” if the US and Europe and elsewhere had matched China’s investment. Improving battery technology would be “fundamental” to advancing decarbonisation efforts because of the intermittency of renewables.
He cited data from the International Energy Agency on total public funded energy research – totalling $US23bn ($A35bn) in 2021 – as proof we can do more. “If we were serious about the energy transition,” he said, “you’d think we would be collectively spending more than what Americans spend [each year] just on treats and food for their dogs and cats”.
Your bank may have a higher-yielding savings account — but it won’t necessarily let you know. The Federal Reserve has raised its key interest rate five times this year, most recently on Wednesday, as part of its ongoing effort to slow the pace of inflation.
Think of it as the virtuous cycle of the lending and saving relationship that banks have with their customers. But until recently, the interest earned on savings accounts hasn’t been all that impressive. “Every interest rate has fallen quite far from previous decades,” said Bankrate.com chief financial analyst Greg McBride in an email.
Up until this year, McBride said, interest rates had declined for the better part of 40 years — and so has the amount of money that banks pay into those accounts. “Looking back to the early 1980s, the Fed funds rate, Treasury yields, and mortgage rates were in the double digits,” he said. “In 1990, the Fed funds rate was over 8%, Treasury yields were 7% to 9%, mortgage rates were 10%.
“By 2020, the Fed funds rate was near zero, Treasury yields were under 2%, and mortgage rates were 2.5% to 3%.”Now that these rates are rising again, money costs more money. But that means there’s an opportunity to get higher returns on deposits. McBride advises customers to shop around to get the best return on their savings.
Not all banks have significantly increased their interest rates for savings accounts. According to the Federal Deposit Insurance Corp., the average national savings account interest rate is 0.17%. Those low interest rates on savings account deposits recently caught the attention of lawmakers on Capitol Hill, who pressed big bank CEOs last week on why rates weren’t higher.
“As rates continue to rise, we would expect to continue to raise the rates we pay to customers,” Wells Fargo CEO Charlie Scharf said in congressional testimony Thursday. Some financial institutions, especially those that are Internet-only with no brick-and-mortar locations, have traditionally advertised higher interest rates with their high-yield savings account products. Some of these banks offer more than 1% or 2% — and in some rare cases more than 3% on savings accounts, according to NerdWallet representative Chanelle Bessette.
Bessette said online banks have fewer overhead costs than brick-and-mortar branches, and also must do more to compete for deposits. Both Bankrate and NerdWallet offer lists of institutions currently offering the highest yields. Among them are Discover, Capital One, American Express Savings, and Marcus by Goldman Sachs. McBride, the chief financial analyst for Bankrate.com, said it is easy to enroll in one of those accounts, even if you do your primary banking elsewhere.
“You can open an online savings account with just a few minutes of your time, and link it to the checking account at your current financial institution in order to move money back and forth seamlessly,” he said. “If your bank has rolled out a new savings account with a higher yield than the one you’re currently in, just reach out and ask to transfer your money into the new, higher yielding account.”
In some cases, banks aren’t making it clear to existing customers that they can now obtain a greater savings-account yield, McBride said. “We are seeing some chicanery where banks roll out a new savings account that offers an attractive yield while the existing account holders remain in the original account with the original rate,” McBride said in an email.
“It is easy enough to switch to the new account, but you have to take the action to make that happen, the bank won’t come knocking on your door with that opportunity.”
Savings interest rates have slowly been going up in the last few months, and the Federal Reserve has continued to raise interest rates to address inflation. If you’re ready to take charge of your savings and find ways to earn more interest on your money, here are five options to explore.
1. Ask your bank for an increase in your savings rate
While savings interest rates have tentatively increased in the last few months across various financial institutions, this doesn’t necessarily mean your savings account will see a sudden bump in its rate.
If your bank hasn’t made an announcement yet, Maggie Gomez, CFP® professional and owner of Money with Maggie, suggests asking your bank for an increase in the current rate you receive.
Gomez explains some financial institutions won’t immediately deliver a higher rate unless consumers get proactive. “Later, to be more competitive, they’ll increase their rates more publicly, but I think it’ll be really slow,” Gomez adds.
2. Search online financial institutions for a high-yield savings account
According to the FDIC, the national average rate interest rate on savings accounts is 0.17% APY as of May 2022. However, several financial institutions pay much more than the national rate.
Jerel Butler, CFP® professional and founder of Millennial Financial Solutions, suggests looking at online financial institutions for competitive interest rates on savings accounts.
“It’s a little bit tricky with inflation going on,” Butler notes. “The best savings option for a typical savings account is an online savings account.”
Most banks earn compound interest daily. Meanwhile, credit unions usually earn compound interest monthly. If you’re not sure about your account’s compound frequency, contact your bank’s customer support.
3. Consider switching banks if the rate is worth it
Butler says you should also take the time to explore other financial institutions and compare different savings accounts.
“This is a great chance to take advantage of the rising interest rate market, and you may be able to take advantage of a welcome bonus at another bank,” adds Butler. “A lot of banks — as a result of the higher interest rates — are running special promotions, too.”
If you find a specific account that provides more compelling offers than your current bank, you might consider switching institutions.
4. Buy savings bonds
Savings bonds are federally issued debt securities. Lindsey Bell, chief markets and money strategist for Ally, says federally issued bonds are a safe investment option, although there are a couple of things to keep in mind.
“There’s a limit on what you can invest in those. They are also probably a little more volatile than a CD or savings account, so you have to take that into account,” explains Bell.
5. Build a CD ladder with short-term CDs if you find a competitive rate
Butler says building a CD ladder might be ideal if you find a competitive rate and are generally risk-averse. However, if you’re not risk-averse, Butler adds there are more options you should consider first.
CD ladders offer a way to take advantage of higher interest rates on CDs. Instead of depositing all your money into a single CD and locking your deposits for a set time, you’ll split your savings into a mix of term lengths.
Bell suggests sticking to CDs under one or two-year terms. If interest rates increase during the year, a CD ladder provides enough flexibility to buy a new CD once your short-term accounts mature.
There’s a reason why the phrase “timing is everything” doesn’t make us cringe quite as hard as other real estate cliches. (We’re looking at you, “location, location, location.”) Here’s why: It’s accurate. Homebuyers are always trying to time the real estate market so they can make the best possible deal—and it’s often difficult to do.
Time is the common thread between questions about mortgage rates (Should I lock in my mortgage rate now before they rise in a month’s time?), housing inventory (Should I put off buying until next month to see if there are more houses for sale?), and even relocating (Should we buy now so we can move before the new school year starts?).
At the current moment, homebuyers face a perplexing mix of realities: mortgage rates are still up and inflation is still putting pressure on everyone’s bottom line, but the median listing price actually fell (yes, fell) to $435,000 in August, down from an all-time high of $450,000 in June. So with all these question marks in the air, it’s hard not to wonder if it would be downright foolish to buy a house right now, or if the timing is actually good.
This week we clocked a particularly interesting discussion floating around on the r/RealEstate subreddit after one user posted the following question point-blank: “I was just told it’s the single worst time to buy real estate in U.S. history. How far off are they?”Reddit users chimed in with a variety of entertaining hot takes and personal anecdotes on the matter.
What experts think about buying a house right now
We’ve heard what the people have to say, now let’s bring a little data into the mix.“It’s true that home prices are high in 2022, so that perspective suggests that now might not be a great time to buy,” says Realtor.com Chief Economist Danielle Hale. “On top of that, the cost to borrow money right now—the interest rate you’ll pay on a mortgage—is also not far off of its highest level in more than 13 years.
This means that borrowing to buy a home is more expensive than it has been.”But Hale says these shouldn’t be buyers’ only considerations. With rents at an all-time high and still rising, buying a home and being your own landlord has advantages.
“You may think of owning a house as not having to pay rent, but economists view this as paying rent to yourself,” says Hale. “Taking on a mortgage with a fixed rate of interest (at least for a period of time) means that the homeowner has locked in the lion’s share of their housing costs—a nice hedge against inflation that is still running at just under 9%.”
She says that even if you don’t see any future home price appreciation, it can make more sense to buy than rent, especially in markets where the monthly cost of owning a home is lower than the monthly cost of rent.
“There aren’t as many of those markets, but there are still some, predominantly in the South and Midwest, as we found in our recent rental report,” Hale says.
Is it a good or bad time to buy a house?
With that information in mind, let’s go back to our initial question: Is now the worst time in history to buy a house?
“The data points to the ‘worst’ being behind us,” says Hale. “The number of homes for sale is up more than 26% compared to one year ago, which means that today’s shoppers have more homes to choose from than last year’s shoppers. Perhaps more importantly, the share of sellers making a price cut has risen, suggesting that today’s shoppers may have more negotiating room than before.”
Hale does acknowledge that homes are still more expensive than last year, but the price growth rate is slowing and is likely to slow further. Another positive indicator for buyers? Homes are lingering on the market longer.
“Time on market is beginning to increase, signaling that the days of having to make an offer as soon as possible—perhaps even before seeing the home—are behind us,” Hale says.Ultimately, buying a home is a wholly personal decision and the right timing varies from buyer to buyer.
“While market conditions couldn’t be called the best for buyers, they are somewhat improved,” says Hale. “Each of these indicators points to better balance than the housing market has seen over the last year, an advantage for today’s shoppers.”
Natalie Way is the senior editor at Realtor.com who covers news and advice stories about real estate, design, and celebrity homes. Natalie produces and co-hosts the “House Party” podcast. She can be reached at firstname.lastname@example.org.
Property investment is a process, not just an event. So rather than just talking about going out and buying a property in 2022, the right time for you to consider investing is when you have all your ducks in a row.
set up the right ownership structures to protect your assets and legally minimise your tax,
a robust finance strategy with a rainy day buffer in place to buy you time
Of course, for some 2022 will be a great year to invest, but in a moment I’ll explain why that will not be the case for others. Sure interest rates are rising, but there is more to property price growth than that. It’s likely that you’ve heard me talk about the drivers of property price growth over the years.
There are so many things that determine a property’s price performance and growth trajectory, many of which are well outside of your control, and some of which also have nothing to do with the property itself. These include, but are not limited to:
The economy – the performance and state of the broader economy impact people’s ability to buy and sell property as well as …
Consumer Confidence – when people feel comfortable about their financial situation and their future job prospects they are more likely to make big purchases like moving home or buying an investment property.
Employment levels – if the community at large is experiencing high levels of unemployment, then fewer people can afford to pay a mortgage, which reduces demand for property
Government policy – aspects to do with tax, depreciation, and homeownership grants will work to boost or reduce demand for property, particularly new property in recent years, which is where the federal government’s primary agenda has been.
Population growth – or household formation to be more exact, as when more people move into an area this equals more demand for housing, whether it’s to buy or rent.
Local Demographics – things like average incomes, average age, household structure, crime rates, and employment opportunities.
Supply – The basic economic principle of supply and demand is a fundamental property market driver of price growth.
Availability of credit – property investment is a game of finance with some houses thrown in the middle, but even owner-occupier demand is very much driven by the availability of finance and the cost of money, in other words, interest rates.
Now, as a result of these factors – which are by no means an exhaustive list, but they give you a general indication of some of the major influences on property prices – our property markets move through cycles, from booms to busts and back again.
Last year rising property values around Australia were driven by a combination of pent-up demand and historically low-interest rates leading to FOMO (fear of missing out), which led many home buyers and investors to make take shortcuts just to get in the market.
Bitcoin dropped below $20,000 Saturday—trading at its lowest levels in over a month—after stocks sold off sharply Friday as investors pulled back from risky assets amid renewed concerns the Federal Reserve’s efforts to fight inflation could tip the economy into recession.
Bitcoin fell to a low of $19,886 Saturday before recovering slightly, trading at $20,055 as of the late afternoon, down 2.93% over the past 24 hours and off 70.1% from a record high of $67,037 in November.
The Dow Jones Industrial Average plummeted more than 1,000 points to 32,283 on Friday after Federal Reserve Chair Jerome Powell warned that soaring inflation will “take some time” to ease and will require the Fed to act “forcefully.”Other cryptocurrencies fell Saturday, with Dogecoin dropping 3.53% to 6 cents, while Ether sank 4.99%, to $1,481.
Shares of leading crypto broker Coinbase, meanwhile, fell 6.49% Friday to close at $66.74, down sharply from $368.90 in November, amid lower crypto trading volumes in a slumping market.
Low interest rates and government stimulus during the Covid-19 pandemic fueled skyrocketing cryptocurrency prices, but they’ve fallen substantially in recent months. Economists are divided on the possibility of recession. On Friday, economists at Goldman Sachs said the odds of entering a recession over the next year are roughly one in three, while economists at Nomura said they believe one will start this year and Bank of America warned a “mild recession” is possible by the end of the year.
So far, the Federal Reserve has made two interest rate hikes in its effort to curb inflation, raising its key lending rate 75 basis points in May and again in July, after inflation hit a 40-year high.
More than 50% of daily bitcoin trading is likely fake or non-economic, Forbes determined in an analysis published Friday, underlining concerns about the transparency and solidity of crypto markets. In the analysis of 157 crypto exchanges worldwide, Forbes found daily bitcoin volume on June 14 was $128 billion, 51% lower than the $262 billion from the total self-reported volume from multiple sources.
Price-charts show Bitcoin saw rejection at last week’s $21,800 level. It experienced some support at $20,500 over the weekend and dropped to the $19,700 mark in early Asian hours today. A brief bump up to almost $20,000 was followed a return to the lower level in the European morning.
The declines came as Singapore state-owned Temasek Holdings, which manages more than $287 billion of assets, cautioned of more downturns across financial markets, citing the likelihood of a “recession in developed markets.”
Temasek said it forecast a “mild recession” in the U.S. next year, adding that China faces “challenges” and the global economy “is in a fragile state.” “Rising inflation, surging commodity prices, and severe supply chain bottlenecks have uncovered further fault lines in the global marketplace,” it said in a statement.
The euro dropped to a 20-year low of $1.0002 against the dollar, approaching parity. The weakness arose amid concerns of an energy crisis stemming from Russia’s invasion of Ukraine that would tip the region into a recession, while the dollar was buoyed by expectations of the Federal Reserve committing to faster rate hikes.
Equity markets also suffered. In Asia, the Hang Seng index fell 1.26% while Japan’s Nikkei 225 dropped 1.75%. The Stoxx Europe 600 index fell 0.60%, while Germany’s DAX lost 1%. U.S. futures on the Nasdaq 100 and S&P 500 fell 0.68%.
Some Bitcoin investors see more reasons for a decline than a rebound.
“An additional reason has strengthened our view that the upside will be capped in the near-term: This is the news about Mt. Gox releasing approximately 140,000 BTC in August,” QCP Capital traders said in a Telegram broadcast on Tuesday.
“Our main takeaway is that there is a high chance of BTC supply flooding the market soon,” they wrote. “The possible impact would be additional selling pressure on BTC and perhaps the outperformance of ETH and Alts against BTC.”
The U.S. economy shrank for a second quarter in a row this year, a second estimate from the Bureau of Economic Analysis confirmed Thursday—once again signaling the start of a technical recession even as economists predict signs of a slowdown will only grow in the coming quarters, likely prompting the government to officially declare the economy has entered a recession.
The U.S. economy shrank at an annual rate of 0.6% in the second quarter despite average expectations originally calling for a 0.3% increase—marking the second consecutive quarter of negative gross domestic product growth and thereby signaling the economy has entered a technical recession, the Bureau of Economic Analysis reported in a second estimate released Thursday.
The figure was worse than the 0.5% decline economists were expecting, but ticked up from the 0.9% decline estimated last month.The government blamed the worse-than-expected figure on declines in residential investments (or home buying), federal government spending and business inventories, but said an uptick in exports and spending helped economic activity improve from last quarter’s decline of 1.6%.
According to one working definition, a recession comprises two consecutive quarters of negative GDP growth, says Wells Fargo senior economist Tim Quinlan—but it’s not the official one: Instead, the definitive call is up to the National Bureau of Economic Research, which defines a recession as “a significant decline in economic activity” lasting “more than a few months.”
Quinlan points out four of the six factors the NBER relies on to declare a recession—production, income, employment and spending—continued to signal expansion through May, but he notes production appears to be “losing steam” and income gains are struggling to keep up with inflation, all while unemployment claims rise and consumers start spending less.
Like other economists, Quinlan isn’t convinced economic indicators last quarter were indicative of a current recession, but he warns the economy is slowing and “it is starting to feel like [entering one] is only a matter of time.”
“We do not think the economy is in recession at present, but if our forecast is correct, this is not so much of a head fake as it is a harbinger of worse to come,” says Quinlan, who argues the negative GDP growth in the first half of the year isn’t likely a function of weak underlying demand but instead due to “one-off” volatile factors such as net exports and inventories. “We expect the loud wailing of an actual recession to begin early next year,” he adds.
The government will update its estimate, based on more complete data, for a third and final time in September.
Though economist projections continued to call for a return to growth in the second quarter, the Federal Reserve Bank of Atlanta’s GDPNow model in July began signaling the start of a technical recession, pushing its GDP forecast into negative territory after economic data showed consumer spending dropped in May. “The model’s long-run track record is excellent,” say DataTrek analysts Nicholas Colas and Jessica Rabe, pointing out its average error has been just 0.3 points since the Atlanta Fed started running it in 2011.
Ahead of the GDP print, the model projected the economy shrank 1.2% last quarter. It now projects the economy will grow 1.4% in the third quarter. The Fed’s withdrawal of pandemic stimulus measures and interest rate hikes this year have fueled concerns of impending recession. In July, Bank of America economists warned clients that prolonged inflation and the resulting interest rate hikes have unleashed a “worrying deterioration” in the economy, and particularly in the once-booming housing market.
“The Fed has become more committed to using its tools to help restore price stability, with a willingness to accept at least some pain in the process,” they said, predicting the economy will fall into recession over the next year.