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Forecasters have raised their outlooks for a recession and boosted their inflation projection as the Federal Reserve faces the quandary of fast-rising prices and greater uncertainty from Russia’s invasion of Ukraine, according to the latest CNBC Fed Survey.

The probability of a recession in the U.S. was raised to 33% in the next 12 months, up 10 percentage points from the Feb. 1 survey. The chance of a recession in Europe stands at 50%.

Respondents debated whether the recent surge in commodity prices would prompt the Fed to hike rates faster because it adds to inflation or raise rates less because they reduce growth.

“The tax impact of higher commodities prices is likely to slow the pace of hiking more than the inflationary impact is to accelerate it,” wrote Guy LeBas, chief fixed income strategist at Janney Montgomery Scott.

But Rob Morgan, senior vice president at Mosaic, wrote: “I expect six quarter-point rate hikes from the Fed in 2022. If CPI reaches 9% in the March or April report, the Fed might be pressured into a 50-basis point hike in May.”

The 33 respondents, who include fund managers, strategists and economists, forecast the Fed will raise rates an average of 4.7 times this year, bringing the funds rate to end the year at 1.4% and to 2% by the end of 2023. Nearly half of the respondents see the central bank hiking five to seven times this year.

The rate hike cycle is seen ending at a peak funds rate of 2.4%, about the Fed’s neutral rate. But half of all respondents believe the central bank may ultimately have to raise rates above neutral to get control of inflation.

Propelling the rate increases are forecasts for the consumer price index to peak at 8.5% in March, but gradually decline to finish the year at a still high 5.2%. That’s nearly a full percentage point higher than the February survey. The CPI in 2023 is forecast to rise a tamer 3.3%, a rate still above the Fed’s target.

“We might be on the cusp of the Fed raising rates at the same time there is a minus sign in front of GDP,” wrote Peter Boockvar, chief investment officer of Bleakley Advisory Group. “What an awful position to be in, but until inflation falls sharply, they have no choice but to carry on.”

While a recession is seen as a greater possibility than in February, it’s not the base case for most respondents. The average GDP forecast for this year slipped by 0.8 percentage point but remains at a slightly above-trend 2.8%. The GDP forecast for 2023 dropped by about a half a point from the last survey to 2.4%.

Inflation forecasts had already been high for this year, but Russia’s invasion of Ukraine has aggravated the situation with nearly 90% saying they boosted their 2022 inflation outlook because of the war. They added an average 0.8 percentage point to their inflation forecast. Sixty percent of respondents said they shaved the GDP forecasts due to the conflict, with an average of a half a point.

While inflation forecasts rose and growth outlooks declined, the outlook for stocks is relatively bullish. Respondents lowered their outlook for equities, but only 53% now say stocks are overvalued relative to the outlook for earnings and growth. That’s down from 88% a year ago, and the least bearish respondents have been since the Covid pandemic began.

Meanwhile, the CNBC Risk/Reward ratio (measuring the chance of a 10% correction verus the chance of a 10% increase in the next six months) improved to -9 from -14, meaning a negative correction is judged less likely. The outlook for the S&P 500 dropped to 4,431 this year, suggesting stocks could have 6% upside from the current level.

Another surge in energy prices pushed wholesale goods prices to their biggest one-month jump on record in February, according to Labor Department data released Tuesday.

Final demand prices for goods jumped 2.4% for the month, the largest move ever in data going back to December 2009, the Bureau of Labor Statistics said.

That pushed the headline producer price index up 0.8% on the month, which actually was slightly lower than the 0.9% Dow Jones estimate.

Excluding food, energy and trade services, so-called core PPI rose just 0.2%, well below the 0.6% expectation.

On a year-over-year basis, headline PPI rose 10%, the same as January and tied for the biggest 12-month move ever.

The data came during the week of Feb. 13, before the Russian invasion of Ukraine. Energy prices surged even more as the war began, and will show up in next month’s report.

The numbers coincide with most other inflation gauges running around 40-year highs, thanks to price increases that have spread beyond volatile gas and grocery prices and across a broad spectrum of consumer goods and services.

In response to the inflation trend, the Federal Reserve is expected on Wednesday to raise interest rates for the first time since December 2018.

“Producer prices are an early warning sign of what households can expect in terms of consumer price inflation,” wrote PNC economist Kurt Rankin. “The message is clear that consumer prices have several months of exceptional gains ahead of them still, despite the fact that the Fed is set to begin hiking its policy rate in March and continue to do so throughout the year.”

Gasoline was still the main story in February when it came to final demand prices.

Some 40% of the increase in wholesale goods prices came from gasoline, which rose 14.8%. Diesel fuel and electric power also helped feed an 8.2% increase in final demand energy prices, while motor vehicles and equipment and dairy prices also climbed. Various prices for food products, such as fresh and dry vegetables along with beef and veal showed declines.

The PPI is not as closely watched as the consumer price index, but wholesale costs feed into prices at the register and are seen as a harbinger of inflation.

Demand for single-family rental homes is soaring, pushing prices to record highs, as Americans continue to want larger homes with outdoor spaces.

Single-family rents gained a record 12.6% year over year in January, according to a new report from CoreLogic. That compares to an increase of 3.9% in January 2021.

Every major market saw increases, but cities in the Sun Belt saw truly stunning numbers.

For example, single-family rents soared 38.6% in Miami, up from just 2% the previous January. Orlando, Fla., and Phoenix were next in line, with gains of 19.9% and 18.9%, respectively, as Americans continued their migration to warmer parts of the nation. The Washington, D.C., area saw the lowest annual growth in rent prices — but they were still up 5.6%.

“Single-family-rent growth extended its record-breaking price growth streak to 10 consecutive months in January,” said Molly Boesel, principal economist at CoreLogic.

Demand for single-family rentals is so strong partly because the market for potential homebuyers is so tough. Not only are home prices up 19% from a year ago, but the number of listings are still historically low. That means homes that are listed often sell in a matter of weeks, if not days.

Rent growth is strongest in the middle of the market, according to the report. CoreLogic looked at four tiers of rental prices and found the weakest growth on the edges:

• Lower-priced (75% or less than the regional median): up 12%, compared with 3% in January 2021
• Lower-middle priced (75% to 100% of the regional median): up 13.3%, from 3.2% in January 2021
• Higher-middle priced (100% to 125% of the regional median): up 13.4%, from 3.6% in January 2021
• Higher-priced (125% or more than the regional median): up 12.2%, from 4.5% in January 2021

Apartment rents also are still rising, but the gains are moderating slightly, as more supply comes on the market to meet demand.

But the same is not true for the single-family rental market. While more builders and investors opt for build-for-rent projects, the available inventory is still on the low side, with building hampered by supply chain disruptions and the industry labor shortage.