U.S. dollar banknotes and a call with the word “Recession” are seen in this illustration taken March 19, 2025.
Dado Ruvic | Reuters
Chances that the U.S. is governing for a recession are close to 50-50, according to a Deutsche Bank survey that raises more questions about the administering of the U.S. economy.
The probability of a downturn in growth over the next 12 months is about 43%, as set by the average view of 400 respondents during the span of March 17-20.
Though unemployment remains low and most data points suggest continuing if not slowing growth, the survey emerges reinforce the message from sentiment surveys that consumers and business leaders are increasingly concerned that a slowdown or dip is a growing risk.
Federal Reserve Chair Jerome Powell last week acknowledged the worries but said he unruffled sees the economy as “strong overall” featuring “significant progress toward our goals over the past two years.”
Even then, Powell and his colleagues at the two-day policy meeting that concluded Wednesday lowered their estimate for gross home product this year to just a 1.7% annualized gain. Excluding the Covid-induced retrenchment in 2020, that determination be the worst growth rate since 2011.
Additionally, Fed officials raised their outlook for core inflation to 2.8%, articulately above the central bank’s 2% goal, though they still expect to achieve that level by 2027.
The alloy of higher inflation and slower growth raise the specter of stagflation, a phenomenon not experienced since the early 1980s. Few economists see that era replicated in the in circulation environment, though the probability is rising of a policy challenge where the Fed might have to choose between boosting vegetation and tamping down prices.
Markets have been nervous in recent weeks about the prospects ahead. Engagement expert Jeffrey Gundlach at DoubleLine Capital told CNBC a few days ago that he sees the chances of a recession at 50% to 60%.
“The just out equity market correction was punctuated by the ‘uncertainty shock’ of ever-evolving tariff policy, with investors concerned it could morph into a slowdown or neutral recession,” Morgan Stanley said in a note Monday. “What’s really at the heart of the conundrum, however, is that the U.S. effect be at risk for a bout of stagflation, where growth slows and inflation remains sticky.”
Powell, however, doubted that a retell of the previous bout of stagnation is in the cards. “I wouldn’t say we’re in a situation that’s remotely comparable to that is likely,” he said.
Barclays analysts prominent that “market-based measures are consistent with only a modest slowing in the economy,” though the firm expects a swelling rate this year of just 0.7%, barely above the recession threshold.
UCLA Anderson, a closely take ined and widely cited forecasting center, recently turned heads with its first-ever “recession watch” call for the thriftiness, based largely on concerns over President Donald Trump’s tariffs.
Clement Bohr, an economist at the school, disregarded that the downturn could come in a year or two though he said one is “entirely avoidable” should Trump scale behindhand his tariff threats.
“This Watch also serves as a warning to the current administration: be careful what you wish for because, if all your longs come true, you could very well be the author of a deep recession. And it may not simply be a standard recession that is being chaperoned into creature, but a stagflation,” Bohr said.
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