The chances of the United States entering a recession have increased to a 50%/50% chance, according to a Deutsche Bank, raising more questions about the direction of the United States. Although unemployment has remained low, data points suggest the continuing of slow growth, and the probability of a downturn over the next twelve months is about 43%. Jerome Powell, the Federal Reserve Chair, claims that the economy is "strong overall," but he and his colleagues lowered their GDP growth estimate to 1.7% and raised the outlook for core inflation to 2.8%. The combination of higher inflation and growth began to decline, raising concerns regarding stagflation. In recent weeks, markets have been nervous, and bond expert Jeffery Gundlach at DoubleLine Capital forecasts a 50% to 60% recession to occur. A recent stock market decline was driven by uncertainty over U.S. tariff policies, raising fears of a potential economic slowdown or stagflation. Barclays expects only modest economic slowing, projecting just 0.7% growth for the year. Meanwhile, UCLA’s Anderson Forecast issued its first-ever “recession watch,” citing Trump’s tariffs as a key risk. Economist Clement Bohr warned that unless tariff threats are reduced, the U.S. could face a deep and possibly stagflationary recession.
Overall, the current state of the economy is not looking good. On one hand, low unemployment and steady consumer spending offer some reassurance. On the other hand, rising inflation, slower growth projections, and uncertainty around trade policies make both economists and investors nervous. So much so that talks about stagflation are a possible concern. The future of the economy is uncertain, and only time will tell what will happen.
The probability of a recession is approaching 50%, Deutsche markets survey finds
It’s interesting how the recession risk is rising even with low unemployment. UCLA’s first-ever “recession watch” really shows how much concern there is over Trump’s tariff policies.
ReplyDeleteIt is definitely an interesting time with these recessions risks with many saying there is a chance of it happening, then the others saying the economy is under control and will not enter a recession.
ReplyDeleteIt's interesting to see how much Trump's tariff policies have effected things like the stock market and consumer confidence before they have even been implemented.
ReplyDeleteThis post paints a pretty sobering picture of the U.S. economy right now. Even with low unemployment, the mix of slowing growth, persistent inflation, and rising recession odds is definitely alarming especially with the mention of stagflation, which is tough to navigate economically. It’s clear that tariff policies are a major wildcard here, and the uncertainty they create seems to be shaking both consumer and market confidence. If these projections hold, policymakers are going to face some difficult choices in the months ahead.
ReplyDeleteFor UCLA to publish its first ever recession watch, means that there are serious implications of Trump’s tariff threats. Hopefully, the administration is aware of the consequences of their actions and will act accordingly…
ReplyDeleteCurrently, Powell asserts that the underlying statistics of the economy are healthy (unemployment numbers, etc.). Since a lot of those are lagging indicators, could there be a chance that things are worse than they appear?
ReplyDeleteTariffs and rising inflation are definitely concerning. The current trends are making it look like we will continue to see downward trends across our economy.
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