\u201cUncertainty about the stability and trajectory of the global economy remains acute,\u201d the report read, adding that policy changes, \u201cfinancial market fragilities\u201d and structural pressure on global labor forces mean risks remain \u201ctilted to the downside.\u201d<\/p>\n
Which Countries Are At Risk Of A Recession In 2026?<\/strong>United States<\/strong><\/p>\n President Donald Trump<\/a>\u2019s \u201cLiberation Day\u201d tariff announcements in April sent markets into a tailspin and businesses scrambling to stockpile goods before the duties went into effect while raising the specter of a recession only months into his second term. Fears worsened when advance estimates showed the economy contracted in the first three months of 2025 but have since been somewhat tempered thanks to strong GDP<\/a> growth in the second and third quarters.<\/p>\n However, beyond immediate policy shocks such as tariffs\u2014the effects of which will continue to be felt in 2026\u2014experts have pointed to other underlying corrosives that could tip America toward a downturn next year.<\/p>\n \u201cLabor markets here are atrophying,\u201d financial analyst Gary Shilling told Newsweek, noting that a slowdown in hiring<\/a> has combined with a worrying increase in job cuts<\/a>.<\/p>\n Shilling, among the first experts to raise concerns about the housing bubble that preceded the Great Recession that began in late 2007, went on to say that U.S. consumers are \u201cup to their eyeballs in debt<\/a>\u201d and described the current economy as a \u201cflattened-down environment\u201d that any kind of shock could push into crisis, most notably the AI bubble bursting.<\/p>\n AI stocks now account for one-third of the S&P 500 in terms of overall market cap, per Bank of England estimates, and investments in the technology made up more than 90 percent of GDP growth in the first half of 2025, according to Harvard economist Jason Furman. As a result, a sharp correction would ripple through the entire economy and impact all of its constituents.<\/p>\n Dean Baker, economist and co-founder of the Center for Economic and Policy Research (CEPR), told Newsweek: \u201cThe biggest risk, first and foremost to the U.S. economy, is a collapse of the AI bubble. The loss of trillions of dollars in stock wealth will cause consumption to fall. <\/p>\n “Also, since there is heavy leverage associated with both AI and crypto we will almost certainly see some major stress in the financial system. There will be secondary effects in Europe<\/a> and elsewhere in the world, but the U.S. will be by far the biggest victim of a collapse.\u201d<\/p>\n Europe and U.K.<\/strong><\/p>\n Many of Europe\u2019s largest economies are projected to grow at a slower pace that the 3.1 percent global rate outlined by the IMF, raising the odds that they could experience the two negative quarters of GDP contraction that fulfils the common, technical definition of a recession.<\/p>\n These include France<\/a> (0.9 percent), Germany<\/a> 0.9 (percent) and Italy<\/a> (0.8 percent), but forecasts for the eurozone are sluggish as the block battles elevated debt levels, trade policy uncertainties as well as the ongoing fallout from Russia<\/a>\u2019s war with Ukraine<\/a>.<\/p>\n![\"\"](\"https:\/\/www.europesays.com\/us\/wp-content\/uploads\/2025\/12\/AP25168036175120.jpg\"\/)
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