US Recession Odds Climbing – New Forecasts As High As 99%

Key Takeaways:

A new forecast from Haver Analytics expects a 99.3% chance of a recession in the United States.
Recession estimates have never been this high.
Consumer spending remains vulnerable, which may lead to a contraction in the economy.

Concept of recession and financial problems in USA banking system and world economic crisis, Woman holds cardboard with the word recession against the American national flag

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WISCONSIN (CoinChapter.com) — The US economy has been on a roller coaster ride over the past few years, but the situation remains fragile, and the probability of another recession shortly remains high. A new forecast from Haver Analytics matches that at 99.3%.

Impact of Federal Reserve’s Monetary Policy on US Economy

One primary reason some analysts expect a nearly 100% chance of recession is the Federal Reserve’s monetary policy – estimates have never been this high. Only months ago, most economists were in the 50% range.

The Statista Research Department has dramatically changed its view on recession odds. Credit: Statista

The Fed’s tightening campaign has resulted in effects across the economy.

Higher interest rates make it more expensive for people and businesses to borrow money and slow down spending and investments. The reduction in bond purchases also reduces the amount of money in circulation, further decelerating economic growth.

Impact of Consumer Spending

Another contributing factor is consumer spending. While consumer spending has been strong in recent months, it remains vulnerable. The slowing economy is beginning to inhibit consumers, which may lead to a contraction.

US consumer spending accounts for around 70% of the country’s Gross Domestic Product (GDP). Any significant decrease in spending will have a substantial impact.

Impact of Trade and International Relations on Economy

The US economy is highly interconnected with the global economy. Therefore, trade policy or international relations changes will also significantly impact and contribute to a recession. Recent trade tensions between the US and China are a prime example.

The US-China relationship is of monumental importance going into the presidential election year 2024. Credit: Strategic Risk

Trade tensions will lead to higher tariffs and reduced trade, impacting businesses that rely on exports or imports.

This, in turn, can lead to job losses and reduced economic activity. Similarly, changes in international relations can lead to disruptions in supply chains, which would also have a significant impact.

The web of events that all intertwine and contribute to the US economy are leading top economists to believe the US is on a fast track to a certain recession.