US Economy at Risk of Crash Landing, Allianz Warns
Allianz, one of the world’s largest insurers, has warned that the U.S. economy is headed toward a crash landing. “We expect the economic momentum to deteriorate during the second half of the year on the back of rapidly tightening credit conditions, exacerbated by the banking crisis,” said the insurance giant’s analysts.
Crash Landing Ahead, Warned Allianz
Allianz’s research and analysis division published a report last week stating that the U.S. economy is “headed towards a crash landing.” Allianz is one of the world’s largest insurers with over 122 million private and corporate customers worldwide and more than 159,000 employees. It is headquartered in Munich, Germany.
“Negative confidence effects from the near-death experience in the U.S. banking sector and the unresolved energy situation in Europe will shape the rest of the year,” Allianz’s analysts began. While noting that the U.S. economy “picked up pace in early 2023,” they stressed that this revival will likely be “short-lived.” The analysts continued:
We expect the economic momentum to deteriorate during the second half of the year on the back of rapidly tightening credit conditions, exacerbated by the banking crisis.
Several major banks in the U.S. failed recently, including Silicon Valley Bank and Signature Bank. The Federal Reserve and the Treasury took steps to prevent a systemic crisis, including providing liquidity to the banking system, creating a new lending facility to provide short-term loans to banks, and insuring all deposits of both banks.
“We project a sizeable recession in the U.S. (‘hard landing’) at the end of the year due to increasingly entrenched negative confidence effects, with a slowdown in housing, manufacturing, and construction as interest rate hikes further increase borrowing costs and dampen investment,” the Allianz analysts further detailed in the report.
A number of people have similarly warned that the U.S. economy is headed toward a crash landing. Prominent economist David Rosenberg predicted a recession and a crash landing in March based on data from the Federal Reserve Bank of Philadelphia. Rich Dad Poor Dad author Robert Kiyosaki also warned of a crash landing as federal bailouts followed the banking crisis. Meanwhile, billionaire Barry Sternlicht anticipates a hard landing for the U.S. economy.
What do you think about the warning by insurance giant Allianz about a crash landing? Let us know in the comments section below.