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FirstFT: US set for a recession next year, economists predict

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The US economy will tip into a recession next year, according to nearly 70 per cent of leading academic economists polled by the Financial Times.

The latest survey, conducted in partnership with the Initiative on Global Markets at the University of Chicago’s Booth School of Business, suggests mounting headwinds for the world’s largest economy after one of the most rapid rebounds in history, as the Federal Reserve increases efforts to contain the highest inflation in about 40 years.

Almost 40 per cent of the 49 respondents project that the National Bureau of Economic Research — the arbiter of when recessions begin and end — will declare one in the first or second quarter of 2023. A third believe that call will be delayed until the second half of next year.

The survey results, which were collected between June 6 and June 9, run counter to the Fed’s stance that it can damp demand without causing substantial economic pain. The central bank predicts that, as it raises interest rates, employers in the red-hot US labour market will opt to pare back historically high job openings as opposed to laying off staff, in turn cooling wage growth.

The Fed has already embarked on what will be one of the fastest tightening cycles in decades. Since March it has raised its benchmark policy rate by 0.75 percentage points from near-zero levels.

The Federal Open Market Committee gathers once again on Tuesday for a two-day policy meeting, at which officials are expected to implement the first back-to-back half-point rate rise since 1994 and signal the continuation of that pace until at least September.

Share your feedback on this newsletter by emailing Thanks for reading FirstFT Asia. Here’s the rest of the day’s news — Amanda

1. Senators agree on modest US gun reforms in wake of shootings A bipartisan group of US senators reached a tentative deal on gun-control measures after a string of a deadly mass shootings. The agreement includes funding for states to enact “red flag” laws and tighten background checks. The agreement falls short of the more stringent measures supported by the Biden administration, including the reinstatement of an assault weapons ban.

Gun-control advocates in front of Washington monument
Thousands of gun-control advocates marched in Washington this weekend in support of stronger gun-control laws © Saul Loeb/AFP/Getty Images

2. Russians get first taste of rebranded McDonald’s Vkusno & Tochka, the new name for the fast-food chain, opened its doors on Sunday under local ownership. McDonald’s sold its Russian business last month after declaring operations were “no longer tenable” due to the country’s war with Ukraine. The rebranded business expects to expand to 1,000 restaurants within five to six years.

3. US companies lose billions in earnings as dollar reaches 20-year high The rise of the dollar to its highest level since 2002 has led to an estimated $40bn in losses for US companies this year. The dollar’s strength is being driven by higher interest rates and the country’s faster economic recovery from the pandemic.

4. Tory MPs attack Johnson over plan to rip up Northern Ireland Brexit deal Boris Johnson faces fierce opposition as he prepares to release legislation that will revise his Brexit deal with the EU covering trade in Northern Ireland. An internal note circulating among Tory MPs opposing the bill and seen by the Financial Times accused the legislation of breaking international law and damaging “everything the UK and Conservatives stand for”.

5. Leftwing alliance makes strong first-round showing in French election Jean-Luc Mélenchon’s leftwing alliance made a strong showing in the first round of France’s legislative elections yesterday. While it is unlikely Mélenchon’s group will win the majority in the final round, yesterday’s results mark a dramatic comeback for the French left and give them leverage to voice opposition against Macron’s plans for economic reform.

The day ahead

UK GDP figures The UK will release its April gross domestic product data today plus figures on trade and construction output.

India’s Consumer Price Index India will publish its May Consumer Price Index today. Last week, the Reserve Bank of India raised interest rates and said it would remove Covid-19 era stimulus measures to help bring down inflation.

What else we’re reading

Xi Jinping is reshaping China’s capital markets Beijing’s IPO pipeline is in flux as Xi Jinping aligns the stock market with party objectives. More IPOs now come from industries central to China’s competition with the West (think: biotechnology, renewable energy, and artificial intelligence). Analysts warn this growing state influence could come at a hefty cost if Western governments decide to cut off investment flows.

Column chart of share of Chinese IPO fundraising on major exchanges (%) showing overseas listings evaporate

US oil producers ignore Biden’s call to drill Petrol prices in the US are reaching record highs, helping fuel the country’s rampant inflation and spelling trouble for Democrats in the upcoming midterm elections. President Joe Biden has pleaded with oil producers to increase production, but investor demand, supply chain woes, and soaring input costs are making operators reluctant to drill.

China fires back at US claims of aggression China’s defence minister Wei Fenghe pushed back against US accusations of aggression at a security conference on Sunday. Wei also said Beijing’s annexation of Taiwan “absolutely must be achieved” and that it was “natural” that China was developing new weapons. His remarks are the closest Beijing has come to confirming special hypersonic missile tests.

WTO takes aim at export controls in effort to stem rising food prices At the start of the World Trade Organization’s first ministerial meeting in five years, director-general Ngozi Okonjo-Iweala urged governments to end restrictions on food exports to alleviate the hunger crisis caused by Russia’s invasion of Ukraine. At least 30 countries have imposed such restrictions, according to the IMF.

  • Food vs fuel Millions of people are at risk of “hunger and destitution” as a result of food shortages caused by Russia’s invasion of Ukraine. Some companies and policymakers are eyeing limits on biofuel to boost food supply, but biofuel producers say they are not to blame.

Attack on female diners in China sparks outrage over gender violence Chinese authorities raced to silence the backlash after a brutal attack on three female diners sparked uproar over the lack of protections for women. The country has had to grapple with numerous incidents of sexual violence and gender inequality in the past year, including the disappearance of Olympic tennis star Peng Shuai after she spoke up about sexual misconduct.

Visual Art

Artist Rashid Johnson evokes feelings of longing and homesickness in his exhibition in Menorca and talks about the potential of new media for artists of colour.

“A lot of artists of colour at that time were interested in these new media, partly because it didn’t have all this canonical history that was so framed by western constructs — it was like, maybe we can affect the discourse here,” Johnson said.

Rashid Johnson with his seascape “Angola’ (2022)
Rashid Johnson with his seascape “Angola’ (2022) © Courtesy the artist/Hauser & Wirth. Photo: Daniel Schäfer

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