The US economy received a welcome boost on Tuesday when Deutsche Bank stated that it no longer expects the country’s economy to tip into recession this year.

The bank previously forecast a mild recession following the Federal Reserve’s tightening of interest rates to curb inflation.

However, due to cooling inflation and a “better balance” to the labour market, Deutsche Bank has adjusted its predictions.

In a note published Monday, Deutsche Bank said it now expects the US economy to grow by 1.9 per cent on a quarterly average basis in 2024. This is a significant improvement from the previous prediction of 0.3 per cent growth.

Matthew Luzzetti, chief US economist at the bank, said: "Though the economy continues to face several headwinds – namely, still-tight credit conditions, rising consumer delinquency rates and a slowing labour market – the resilience to date points to a more benign slowdown in 2024 than we had previously projected.”

The bank still expects the Federal Reserve to begin easing interest rates later this year, but it now predicts 100 basis points (bps) of rate cuts in 2024, down from its previous expectation of 175 bps.

Deutsche Bank last week reported 2023 profit before tax of €5.7 billion and announced €1.6 billion of proposed capital distributions to shareholders.

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