10
Loading video...
By Hugh Cameron
Reporter
0
Share
Newsweek is a Trust Project member
See more of our trusted coverage when you search.Prefer Newsweek on Googleto see more of our trusted coverage when you search.
Analysts have raised their expectations of a recession in America's near future.
A prediction model from the global financial services firm JPMorgan Chase, analyzed by Bloomberg*,* suggests that the probability of an economic downturn has grown to 31 percent from 17 percent at the end of November.
Other measures of economic risk have similarly risen in recent days, suggesting that markets are anticipating tough times ahead for the U.S. economy.
Read More on News
Why It Matters
President Donald Trump's tariff proposals—both in the form of threats and implemented policies—have resulted in significant market volatility, as both domestic and overseas businesses rush to adapt to the widespread changes in the trading environment.
If a major economic downturn unfolds, as experts are beginning to fear, this could result in higher unemployment and further strain on already tight household budgets, while impacting public support for Trump and his economic agenda.
What To Know
Several indicators besides JPMorgan's model are currently flashing red, alongside other measures of America's economic health.
The CBOE Volatility Index, a widely watched gauge of market risk, has increased by approximately 50 percent in the past month, suggesting that investors and institutions are hedging their portfolios in anticipation of heightened market fluctuations.
...
The most recent data from The Conference Board shows that the Consumer Confidence Index fell by 7.0 points in February, reaching 98.3. This marks the steepest monthly drop since August 2021. Additionally, the Expectations Index dropped 9.3 points, bringing it to 72.9 and below the 80-point mark which the research group has stated typically signals a potential recession on the horizon. Meanwhile, the percentage of consumers expecting a recession within the next 12 months increased to a nine-month high, with just over 67 percent believing this to be somewhat or very likely.
Although not a definitive indicator of an impending recession, oil prices have fallen to their lowest level since September, indicating weaker demand and, to some, serving as a potential warning for the economy.
Polymarket, the cryptocurrency-driven prediction platform, has opened betting lines on the likelihood of a recession. Users are currently assigning it a 38 percent chance, a significant increase from 23 percent last Friday.
What People Are Saying
Mohamed A. El-Erian, Bloomberg columnist and former CEO of Pacific Investment Management Company (PIMCO), wrote on Tuesday: "While still relatively low, my probability of a recession has increased from 10 percent at the beginning of the year to 25 percent to 30 percent today. This is a consequential and quite unsettling development for an economy with high potential and aspirations, elevated asset prices, and a pivotal role in driving global growth."
Stephanie Guichard, senior economist at The Conference Board, said last week: "In February, consumer confidence registered the largest monthly decline since August 2021. This is the third consecutive month on month decline, bringing the Index to the bottom of the range that has prevailed since 2022. Of the five components of the Index, only consumers' assessment of present business conditions improved, albeit slightly. Views of current labor market conditions weakened. Consumers became pessimistic about future business conditions and less optimistic about future income. Pessimism about future employment prospects worsened and reached a ten-month high."
During his address to a joint session of Congress on Tuesday, President Donald Trump said: "Tariffs are about making America rich again and making America great again. And it's happening. And it will happen rather quickly. There'll be a little disturbance, but we're okay with that. It won't be much."
What Happens Next
Several key economic readings are set to be released in the coming days, which will provide additional insights into the overall health of the U.S. economy.
Following Friday's report on the U.S. unemployment rate and nonfarm payrolls, analysts will turn their attention to Wednesday's report on the core inflation rate from the Bureau of Labor Statistics.
View 0 Comments
Submit Correction
View Editorial & AI Guidelines