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Morgan Stanley economist: Here comes a 'loose' recession

The global economy is likely to grow so slowly in 2023 that it will certainly feel like a recession, one economist says.

“The global economy is slowing, and risks are to the downside,” Morgan Stanley Global Chief Economist Seth Carpenter wrote in a new note, adding that "we are on the cusp of a loose definition of recession.”

And given the general nature of the slowdown, “the distinction between a recession and not is going to be a little murky,” Carpenter told Yahoo Finance Live (video above).

Carpenter is also looking for further slowdowns in consumer spending and the housing market in the United States. At the same time, he said, growth in Europe and China will be mixed at best.

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The economist is projecting global GDP growth to clock in at a meager 2.2% in 2023, with U.S. GDP growing by a mere 0.5%, the eurozone seeing a 0.2% decline, and China potentially growing by 5% as its economy reopens from strict COVID-19 protocols.

As part of the U.S. cooling, Carpenter is predicting the job market will create below 100,000 jobs a month from the 200,000 a month pace realized in 2022.

He isn't the only one on the Street predicting some economic gloom in 2023.

Citi expects the eurozone and U.K. to enter a recession by the end of this year. According to Chief Economist Nathan Sheets, the U.S. stands to enter a recession by mid-2023 as the full impact of higher interest rates from the Federal Reserve is felt by consumers and businesses.

A closed barber shop is shown in Encinitas, California. (Photo: REUTERS/Mike Blake)
A closed barber shop is shown in Encinitas, California. (Photo: REUTERS/Mike Blake)

BNP Paribas, meanwhile, has also outlined a tough road ahead for the global economy.

"We expect a downturn in global GDP growth in 2023, led by recessions in both the U.S. and the eurozone, with below-trend growth in China and many emerging markets," the BNP strategy team said in a note of its own this month.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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