Topline<\/p>\n
Fears of a sharp economic downturn due to President Donald Trump\u2019s ever-changing tariff policies are pervading Wall Street, as some of the most trusted observers of the economy say the U.S. is far from able to declare victory on a tariff-driven recession, though the head of the International Monetary Fund said Thursday the border-spanning organization does not project such a downturn this year.<\/p>\n
Since President Donald Trump took office in January, economic forecasts have been a rollercoaster.<\/p>\n
Getty Images <\/p>\n
Key Facts<\/p>\n
Kristalina Georgieva, the managing director of the United Nations agency IMF, said<\/a> Thursday the fund made \u201cnotable markdowns\u201d to its global economic growth forecasts due to trade disruptions, though it still does not predict a recession, while warning the \u201chigh uncertainty raises the risk of financial market stress.\u201d<\/p>\n Bank of America CEO Brian Moynihan said Tuesday his bank\u2019s baseline economic forecast does not call for a recession this year, but other big banks\u2019 economic models still indicate the chance of a recession this year remains a tossup: Morgan Stanley forecasts 40% odds, Goldman Sachs places 45% likelihood of a recession over the next year and JPMorgan Chase projects a 60% chance.<\/p>\n National Economic Council director Kevin Hassett told<\/a> Fox Business’ on Monday he is \u201c100% not\u201d expecting a recession in 2025, explaining recent discussions with CEOs indicated the \u201cuncertainty over tariffs\u201d won\u2019t be \u201ca big drag\u201d on the economy.<\/p>\n Though the Trump administration\u2019s backdown last week from its most aggressive tariffs alleviated concerns the U.S. was on the cusp of a recession, Hassett\u2019s confidence is far from a consensus view among Wall Street bigwigs and prominent economists.<\/p>\n Ray Dalio, the billionaire founder of the world\u2019s largest hedge fund, Bridgewater Associates, said<\/a> in a Sunday interview with NBC News: \u201cRight now we are at a decision-making point and very close to a recession, and I\u2019m worried about something worse than a recession if this isn\u2019t handled well.\u201d<\/p>\n Lawrence Summers, the former Treasury Secretary during President Bill Clinton\u2019s term, said in a Monday editorial<\/a> podcast in The New York Times he believes it\u2019s \u201csix in 10 or better that a recession will start this year,\u201d explaining: \u201cThe pause is certainly better than if we had simply charged along on the catastrophic path that we\u2019re on, but anybody who thinks the genie is back in the bottle and that it\u2019s all now OK should reconsider their position.\u201d<\/p>\n Last week, Summers predicted<\/a> such a downturn would leave an additional 2 million Americans unemployed, a more than 28% increase from the 7.1 million unemployed Americans in March, and a $5,000 or greater decline in annual household income.<\/p>\n Moody’s Analytics Mark Zandi said Monday on \u201cCNN News Central\u201d he sees the U.S. sinking into a recession over the next \u201cthree, four\u201d weeks if the policy uncertainty is still \u201cvery thick,\u201d saying he hopes \u201cthe president and the administration kind of finds an off ramp here and the trade war de-escalates.\u201d<\/p>\n Bank Of America Survey Finds Investors\u2019 Economic Growth Expectations At 3-Decade Low<\/p>\n Some 42% of big money managers now expect as of April\u2014the fourth-highest monthly reading of the last two decades for Bank of America\u2019s April fund manager survey, which also found the 82% of respondents expect weaker global economic growth, the highest reading in 30 years. The closely watched poll was conducted among 195 managers of an aggregate $444 billion assets under management April 4-10, the week after Trump announced his country-by-country tariffs.<\/p>\n Crucial Quote<\/p>\n \u201cThe prospect of a recession has increased,\u201d Goldman CEO David Solomon said in a Monday earnings call. \u201cOur clients, including corporate CEOs and institutional investors are concerned by the significant near-term and longer-term uncertainty that has constrained their ability to make important decisions,\u201d continued Solomon.<\/p>\n News Peg<\/p>\n Corporate earnings season is underway, which should better reveal the health of the economy during the first three months of 2025. United Airlines<\/a> took a rarely seen step this week of issuing a pair of profit forecasts, one in the case of a recession, and one in the case of more stable growth. \u201cA single consensus no longer exists, and therefore the Company\u2019s expectation has become bimodal \u2013 either the U.S. economy will remain weaker but stable, or the U.S. may enter into a recession,\u201d the company wrote in a regulatory filing<\/a>.<\/p>\n Gold And Oil Prices Hint At Potential Global Slowdowngold And Oil Prices Hint At Potential Global Slowdown<\/p>\n Trading in two of the world\u2019s most precious commodities certainly point to the prospect of a global recession. Gold prices<\/a> are up more than 10% this year to a record $3,300 per troy ounce as investors flood into the historic safe haven asset, while prices for international benchmark Brent Crude sank this month to their lowest point since 2021 as traders braced<\/a> for a potential global weakening in oil demand as economic activity slows. \u201cAlong with simmering geopolitical tensions, gold is benefiting from worries that higher tariffs will kindle inflation,\u201d Solita Marcelli, UBS Global Wealth Management\u2019s chief investment officer Americas, wrote in a Wednesday note to clients, setting a $3,500 per troy ounce price target for the precious metal.<\/p>\n Jamie Dimon\u2019s Recession Warnings Influenced Trump\u2019s Pause<\/p>\n In a Wednesday morning interview just hours before Trump paused many of the more than 10% country-by-country levies, JPMorgan Chase CEO Jamie Dimon told<\/a> \u201cMornings With Maria\u201d he believed a tariff-spurred recession is \u201cprobably\u201d a \u201clikely outcome,\u201d adding he\u2019s heard \u201crecessionary talk\u201d in conversations with other business leaders. Trump said<\/a> the comments from Dimon, the head of the nation\u2019s largest bank by assets and market value, partially inspired his pause. Economists at JPMorgan had labeled Trump\u2019s policies as the \u201clargest tax increase\u201d since 1968 which will \u201cfall heavily on the US consumer.\u201d In JPMorgan\u2019s earnings call Friday, Dimon repeated his pushback against Trump\u2019s targeting of allies in his trade war, explaining the \u201cmost important thing to me is the Western world stays together economically.\u201d<\/p>\n Stock Market Signals Slowdown Fears<\/p>\n Stock prices don\u2019t completely correlate with economic growth, but equity investors are clearly pricing still in significantly increased odds of a down stretch for the U.S. economy. The S&P 500 briefly dove<\/a> into a 20% bear market last week, wiping out about $10 trillion<\/a> in market value, led by<\/a> stocks considered the most vulnerable to a slowdown, including artificial intelligence darling Nvidia and Elon Musk\u2019s Tesla. But markets are still pricing \u201cnowhere close to the worst case\u201d scenario, Bhanu Baweja, UBS Investment Bank\u2019s chief strategist, said last Monday. Even after the post-pause recovery, the S&P is still down 14% from its February peak.<\/p>\n Trump Administration Prepared Americans For The Possibility Of A Recession<\/p>\n Ahead of the \u201cLiberation Day\u201d announcement last week, Trump braced Americans for a possible recession. In a Fox News interview<\/a> aired March 9, he would not rule out the possibility of a recession, cautioning Americans for a period of economic \u201ctransition\u201d as his policies take hold and noting he\u2019s paying little attention to stock market losses. In subsequent media appearances, Treasury Secretary Scott Bessent similarly declined to dismiss a potential recession and said the U.S. will go through a \u201cdetox period.\u201d Bessent told<\/a> NBC\u2019s \u201cMeet the Press\u201d in an interview he believes it \u201cwould have been much healthier if someone had put the brakes\u201d on ahead of the Great Recession. \u201cBe Strong, Courageous, and Patient, and GREATNESS will be the result!,\u201d Trump wrote<\/a> on his Truth Social platform Monday.<\/p>\n What Needs To Happen To Gdp To Trigger A Recession (it\u2019s Not Negative\u2014yet)<\/p>\n The technical definition of a recession is two consecutive quarters of negative growth in gross domestic product, a comprehensive measure of all goods and services produced in a country. The official quarterly GDP stats haven’t turned negative yet, but the Atlanta Federal Reserve’s real-time model<\/a> ignited concerns by calling for -1.8% annual GDP growth in 2025’s first quarter, which would be the worst reading since 2020\u2014though the estimate is likely skewed by its methodology, including how it accounts for a surge in gold imports.<\/p>\n Bond Market Is Shaky\u2014but Yield Curve\u2019s Still Intact<\/p>\n Elsewhere in financial markets, a flight to government-issued debt is evidence of a thirst for safer returns in the face of a potential recession, as yields<\/a> for benchmark 10-year Treasury bonds have dropped by 40 basis points over the past three months (lower yields mean bonds got more valuable). But the most common bond market signal of a recession, the inversion<\/a> of the yield curve, in which longer-term bonds have lower yields than shorter-dated ones, has actually normalized<\/a> in recent months. The New York Fed\u2019s bond-linked recession model calls<\/a> for just 30% recession odds over the next year, down from the more than 70% odds in late 2023, a period which failed to materialize into a full-blown recession.<\/p>\n Consumer Confidence Signals Americans Bracing For Tough Times<\/p>\n Perhaps the most concerning signal over the last is a breakdown in everyday Americans\u2019 conviction in the economy, as the Conference Board\u2019s closely watched consumer confidence survey tumbled<\/a> this month to its lowest level since 2021. That tracks with weaker spending, as February retail sales grew by just 0.2% from January to February, according to a report released<\/a> March 17 by the Census Bureau, far worse than the 0.6% month-over-month increase projected by economists.<\/p>\n Unemployment Rate Is Still Fine<\/p>\n One of the most important hallmarks of the American economy, the labor market<\/a> has shown some cracks in early 2025 as job creation slowed and layoffs spiked, but remains overwhelmingly strong, as March\u2019s 4.2% unemployment rate sits well within the healthy historic norm. A key labor market recession indicator, the Sahm rule, flashes<\/a> a far lower likelihood of a recession than it did when it peaked last summer, inspiring<\/a> a short-lived market selloff in August.<\/p>\n What To Watch For<\/p>\n Trading in two of the world\u2019s most precious commodities certainly point to the prospect of a global recession. Gold prices<\/a> are up more than 10% this year to a record $3,200 per troy ounce as investors flood into the historic safe haven asset, while prices for international benchmark Brent Crude sank this month to their lowest point since 2021 as traders braced<\/a> for a potential global weakening in oil demand as economic activity slows.<\/p>\n What To Watch For<\/p>\n Bessent and Trump have made clear they are lasered in<\/a> on lowering interest rates, which are determined by the politically independent Fed. Typically, rates are only drastically cut during periods of economic distress, as lower rates typically stimulate economic growth as households and businesses are more likely to borrow with lower interest costs, though that uptick in loan activity can simultaneously lead to higher inflation as demand rises. The Fed is likely to hold off on further rate cuts \u201cuntil tariff policy becomes clearer,\u201d according to David Mericle, Goldman\u2019s chief U.S. economist.<\/p>\n Further ReadingForbesDow Tanks 1,300 Points And S&P 500 Enters Bear Market As Recession Fears Accelerate (Live Updates)By Derek Saul<\/a>ForbesExclusive: Wall Street Sours On TrumpBy Sergei Klebnikov<\/a> <\/p>\n","protected":false},"excerpt":{"rendered":"Topline Fears of a sharp economic downturn due to President Donald Trump\u2019s ever-changing tariff policies are pervading Wall…\n","protected":false},"author":2,"featured_media":28300,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5311],"tags":[32,12549,2794,17023,49,978,659],"class_list":{"0":"post-28299","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-united-states","8":"tag-donald-trump","9":"tag-ray-dalio","10":"tag-recession","11":"tag-recession-tracker","12":"tag-united-states","13":"tag-us","14":"tag-usa"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114354963276647701","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/28299","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=28299"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/28299\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/28300"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=28299"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=28299"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=28299"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}