Survey: Economists raise US recession risk to 45 percent

Survey: Economists raise US recession risk to 45 percent Reuters • 9 hours • 2 minutes read New York (Reuters) - The aggressive US tariff policy will lead to a significant slowdown in the US economy, according to economists. They now see the probability of a recession in the world's largest economy in the next 12 months at 45 percent, according to a Reuters survey of economists from more than 100 banks and financial institutions published on Monday. This is the highest figure since December 2023. In March, it was still at 25 percent. US President Donald Trump declared April 2nd "Liberation Day" and imposed massive punitive tariffs on dozens of countries, some of which were later suspended. "Sentiment is incredibly bad right now. This suggests that households are very nervous about spending," said ING Chief Economist James Knightley. "Prices, jobs, and prosperity are all working against consumers. That's a pretty toxic combination for future consumer spending growth." Private consumption accounts for a good two-thirds of US economic output. Economists now expect gross domestic product to grow by only 1.4 percent this year. In March, they had forecast 2.2 percent. Growth for 2026 is forecast at just 1.5 percent, down from 2.0 percent previously. "The uncertainty surrounding tariffs has likely already caused damage," said James Egelhof, BNP Paribas' chief US economist. "This uncertainty is likely to reduce growth, increase inflation, and exacerbate tail risks in the long run." A majority of over 60 percent of economists expect the US Federal Reserve to keep its key interest rate at 4.25 to 4.50 percent until at least July, despite the expected economic slowdown. "It's the ubiquitous presence of tariffs that makes price inflation extremely likely," said Vanguard economist Kevin Khang. "Therefore, we expect price stability to take a slightly higher priority than full employment."<