Beautiful Virgin Islands

Monday, Apr 21, 2025

US economy could be headed toward recession, economist warns: '100% odds' of global slowdown

US economy could be headed toward recession, economist warns: '100% odds' of global slowdown

Rising interest rates and soaring inflation could dampen consumer spending

The U.S. economy could be barreling toward a recession in the next year, as persistently high inflation and an increasingly hawkish Federal Reserve weighs on growth.

Greg Daco, chief economist at EY-Parthenon, warned in a new analyst note that the odds of an economic downturn in the U.S. over the course of the next year are somewhere between 35% and 40%.

There's an even greater risk of a global downturn.

"A U.S. recession is unlikely in the very near term, but there are several uncertainties on the horizon," Daco wrote. "While I put the odds of a U.S. recession somewhere around 35-40% in the next 12 months, the odds of a material global growth slowdown are close to 100% in the next six months."

While the U.S. economy remains strong in the interim, "cracks are starting to appear in the foundation," he wrote. Sky-high inflation, rising interest rates and depressed financial markets are likely to weigh on consumer spending in coming months. Consumer spending accounts for about two-thirds of gross domestic product, the broadest measure of goods and services produced in the nation.

A man shops at a Safeway grocery store in Annapolis, Md., May 16, 2022.


"With the Fed tightening the monetary policy spigot with increased determination and the global economic outlook turning bleaker, the U.S. economy will grow more susceptible to a downturn in the coming months," Daco wrote.

Economic growth in the U.S. is already slowing. The Bureau of Labor Statistics reported earlier this month that gross domestic product unexpectedly shrank in the first quarter of the year, marking the worst performance since the spring of 2020, when the economy was still deep in the throes of the COVID-induced recession.

The analysis comes amid growing fears on Wall Street that the Fed may drag the economy into a recession as it seeks to tame inflation, which climbed by 8.3% in April, near a 40-year high. Bank of America, as well as Fannie Mae and Deutsche Bank, are among the Wall Street firms forecasting a downturn in the next two years, along with former Fed Chairman Ben Bernanke.

"The Fed is attempting to thread the needle while wearing boxing gloves and a mouth guard, which reduces its degrees of freedom to act without causing damage to the real economy," said RSM Chief Economist Joe Brusuelas, who has questioned whether the central bank will be able to achieve a soft landing.

Policymakers raised the benchmark interest rate by 50 basis points earlier this month for the first time in two decades and have signaled that more, similarly-sized rate hikes are on the table at coming meetings as they rush to catch up with inflation.

Federal Reserve Chairman Jerome Powell, right, testifies before the Senate Banking Committee on Capitol Hill. 


Fed Chairman Jerome Powell has acknowledged there could be some "pain associated" with reducing inflation and curbing demand but has pushed back against the notion of an impending recession, identifying the labor market and strong consumer spending as bright spots in the economy. Still, he has warned that a soft landing is not assured.

"It's going to be a challenging task, and it's been made more challenging in the last couple of months because of global events," Powell said Wednesday during a Wall Street Journal live event, referring to the Ukraine war and COVID lockdowns in China.

But he added that "there are a number of plausible paths to having a soft or softish landing. Our job isn't to handicap the odds, it's to try to achieve that."

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
Prince Andrew Joins Royal Family Attends Easter Sunday Service at Windsor Castle
Saudi Arabia Offers Max Verstappen Unprecedented Deal to Join Aston Martin
Global Pistachio Shortage Amid Rising Demand for 'Dubai Chocolate'
Trump is assembling a coalition of Western leaders aligned with the MAGA vision, strengthening a unified front for global change
IMF Predicts No Global Recession Amid Trade Tensions
Here’s a police officer with a brilliant gift for swift education
"Some complain that we put thousands in prison. In reality, we set millions free."
This is Vienna, Austria in 2025.
Boeing Jet Returns to US from China Amid Tariff War
Canadian Federal Election: Candidates' Positions on US-Canada Relations and Donald Trump
Resentencing Hearing for Menendez Brothers Who Killed Their Parents Delayed Amid Legal Disputes
Australian Woman Gives Birth To Stranger's Baby In IVF Mix-up
US Sets Deadline for Russia-Ukraine Peace Deal Brokerage
Italy Introduces 'Sex Rooms' in Prisons for Inmates
California Launches Legal Challenge Against Trump Administration's Tariffs
"Groundless": China Dismisses Zelensky's Claims It's Supplying Arms To Russia
UK Psytrance Festival Cancelled Amid Local Protests Over Noise Concerns
French Far-Right Writer Renaud Camus Denied Entry to UK
UK Police Force Updates Search Policy for Trans Individuals in Custody
Italian Prime Minister Giorgia Meloni Meets with Donald Trump to Discuss EU-US Trade Tensions
Canada's Federal Party Leaders Engage in Final Debate Ahead of General Election
Ukraine and US Sign Outline of Minerals Deal
Fast Food Chain Refuses to Apologize for Online Comment About Katy Perry's Space Voyage
New York Attorney General Letitia James Faces Criminal Referral for Alleged Mortgage Fraud
Mark Cuban admits support for Trump executive order: ‘Gotta be honest’
US Senator Meets with Deported Immigrant in El Salvador Amid Custody Dispute
U.S. State Department Raises El Salvador’s Safety Ranking, Making It Safer Than France and Other European Nations
UK Government Assumes Control of British Steel's Scunthorpe Plant Amid Shutdown Threat
UK MP Wera Hobhouse Denied Entry to Hong Kong During Family Visit
Bangladesh Issues Arrest Warrant for UK MP Tulip Siddiq
China Urges United States to Cancel Tariffs Amid Escalating Trade Tensions
The Empire’s USD Pyramid Scheme Is Working Brilliantly—So Why ‘Fix’ It?
China Raises Tariffs on U.S. Goods to 125% Amid Escalating Trade Dispute
Elon Musk Reports $150 Billion in Projected Government Savings Amid Fraud Investigations
U.S. and Panama Finalize Defense Agreements Amid Canal Access and Chinese Influence Concerns
China Stands Firm Amidst Trade Disputes with the US: A Factual Analysis
U.S. Tariff Escalation Sparks Global Trade Tensions
Helicopter crashes in NYC with four people on board.
Australia Dismisses China's Suggestion to Collaborate Against US Tariffs
EU Postpones Response to US Tariffs
The Trump Administration is contemplating removing Chinese companies from U.S. stock exchanges.
Violent Incidents and Public Safety Concerns Escalate in London and County Durham
UK MP Arrested on Suspicion of Rape and Child Sex Offences
UK Gears Up to Respond to US Tariffs with Industrial Strategies and Trade Initiatives
‘Rocky’ star Dolph Lundgren and his wife Emma Krokdal bask in the Miami sunshine following the actor’s lengthy health struggles.
Spain Encounters Countrywide Protests as Housing Crisis Intensifies
Alisha Lehmann's Modeling Campaign and Public Controversy Stir Debate Ahead of UEFA Women's Euro
U.S. Firms with Major International Revenue Exposure in Light of New Tariffs
President Trump Calls on the Federal Reserve to Reduce Interest Rates in Light of New Tariffs
President Trump Prolongs TikTok Sale Deadline by 75 Days
×