Taming inflation could lead to much higher U.S. unemployment than what the Federal Reserve is expecting, Deutsche Bank analysts said on Monday.
In September, the jobless rate stood at 3.5% — the lowest since February 2020, or just before the pandemic slammed the economy and led to widespread job losses.
Prior to the pandemic, the last time the economy experienced a jobless rate of 6% was in 2014, when the U.S. was still recovering from the Great Recession. In other words, the pain needed to bring down inflation may be far from the"soft landing" that the Fed is aiming for. But actually pushing down inflation to the Fed's goal of about 4% by the end of 2024 would require a bigger spike in unemployment than the central bank is anticipating, the Deutsche Bank economists believe.