Latest news with #RecessionWatch
Yahoo
06-05-2025
- Business
- Yahoo
Do mortgage rates go down in a recession?
There's been a lot of talk lately about the possibility of a recession. In April, JPMorgan Research increased the probability of a recession in 2025 to 60%, up from the earlier prediction of 40%. Torsten Sløk, a partner and chief economist at Apollo Global Management, an alternative asset manager and owner of Yahoo Inc., puts the odds of a recession this year at 90%. Sounds bleak, right? Yet, a recession may be just the kind of economic setback that pushes mortgage rates down. This embedded content is not available in your region. Clement Bohr, economist with the UCLA Anderson Forecast, recently issued a Recession Watch analysis. "Every economist out there right now is saying just this tariff policy alone could trigger a recession in the U.S.," Bohr told Yahoo Finance in a phone interview. However, he added that forecasting a recession is difficult because policy-making decisions by the Trump administration vary day-to-day. Read more: The best mortgage lenders for low or no down payments In this article: What happens to mortgage rates in a recession? "Usually rates come down in a recession," Bohr said. "But it's not always the case, or at least if we look at what's going to happen this time around, it's not necessarily going to be the case." Bohr said mortgage rates usually come down in a recession because, as the stock market becomes more volatile, investors shift their portfolios into government bonds. This pushes the prices of the bonds up — and yields (interest rates) fall. What may be different this time? "The shock that's going to trigger this recession is also a shock that's going to boost inflation, at least over the short term," Bohr added. If the trade war with China causes supply chain interruptions, Bohr said the risk of inflation might put the Federal Reserve in a position to not lower rates any further. With the counterpressures of possible inflation and potential recession, mortgage rates may not move much. "I would be surprised if interest rates go much higher because we have seen now that the administration is sensitive to that," Bohr said. There's also a chance that the nation experiences a mild or very brief recession, which would likely not impact interest rates. That's the thing about recessions — you don't know you're in one until it's already underway — or nearly over. The National Bureau of Economic Research declares a recession after "a few months" of data indicating a declining economy. Learn more: How the Federal Reserve rate decision impacts mortgage rates A 50-year history of recessions and mortgage rates There have been seven recessions over the past 50 years. In all of those economic downturns, 30-year mortgage rates eventually dropped. Sometimes, well after a recession. In the more than yearlong recession lasting from late 1973 to early 1975, rates fell, then rose, then dropped again. In the much shorter, five-month recession of 1980, mortgage rates skyrocketed from 12.85% to over 16% before dropping to nearly 12% as the recession ended. However, between the end of June 1980 and the beginning of the next recession one year later, rates crept up to 17% and even higher before dropping again. In the most recent recession, which lasted barely three months in the early pandemic year of 2020, mortgage interest rates barely budged, hovering near the mid-3% range. Yet, as the pandemic lingered, rates eventually fell to 2.65% before climbing to where they are today. It may take only a slight dip in rates to unlock the housing market Bohr said that existing home sales have been "stuck" for so long, with homeowners sitting on very low-rate mortgages, that they may be sitting in houses that just don't fit their lifestyles anymore. "At some point, say even just a 1% decline in the mortgage rate — which would be quite something — may be enough to trigger a lot of them to finally relocate into something that fits them better,' Bohr said. 'And they'll just eat the extra couple percentage-point margin in the new mortgage." With his outlook of mortgage rates not moving substantially higher or lower, it's a nugget of hope for prospective home buyers. "Even a slight decline in mortgage rates could boost the housing market quite substantially," he said. Read more: Should you buy a house during a recession? Do mortgage rates go down in a recession? FAQs Do home prices drop in a recession? They generally do, but as you can see from the chart above, most mortgage rate movements — up or down — happen outside the very narrow time frames of recessions. What happens if you have a mortgage during a recession? If you have a fixed-rate mortgage, your payment will remain the same unless changes occur with taxes, insurance, or any other escrow accounts that may be a part of your monthly payment. With an adjustable-rate mortgage, if you are beyond the introductory rate period, your payment may reset with the movement of interest rates at its next periodic rate adjustment. Are mortgage rates expected to drop? Most analysts aren't expecting any drastic drops in home loan rates within the next year. Of course, that can change with a dramatic shock to the U.S. economy. Will we ever see a 3% mortgage rate again? It's not likely. However, few, if any, people can forecast an unexpected economic setback. The pandemic was the most recent example — and the 2008 housing market crash another. Laura Grace Tarpley edited this article.
Los Angeles Times
11-04-2025
- Business
- Los Angeles Times
‘I'm so scared': Readers share their trade war anxieties
Good morning. Here's what you need to know to start your day. Who else wants off this roller coaster? After unleashing financial chaos last week with his so-called reciprocal global tariffs, President Trump on Wednesday paused many of them for 90 days. This could be different by the time you're reading this, but as of Friday morning, the Trump administration has maintained a base 10% tariff on nearly all global imports. Previously announced tariffs on Mexico and Canada — two major U.S. trading partners — stand at 25% for most imports, with some exemptions. But the big news is imports from China, which Trump slapped with a 145% tariff. Trump initially announced a 125% import tax on Chinese products, writing on his Truth Social platform that it was 'based on the lack of respect that China has shown to the World's Markets.' Asked by reporters Wednesday why he paused the other tariffs, Trump said 'people were jumping a little bit out of line … they were getting a little bit yippy, a little bit afraid.' After plummeting in the aftermath of Trump's initial tariff plan, the U.S. stock market surged Wednesday when he announced the pause on many global tariffs, then fell again Thursday as fears of a brutal trade war with China set it. For economist Clement Bohr, Trump's walk-back is only a 'marginal relief.' 'There was significant concern about a financial crisis, [which is] why you saw the president eventually backing off … we were close to a precipice there and it was scary,' he said. 'Now we're in a massive trade war with China [that] is basically ripping apart the main artery of the global trading system.' Bohr is an assistant professor of global economics and management at UCLA and issued a 'Recession Watch' last month at the university's Anderson Forecast. I interviewed him for some tariff reporting earlier this week, but given the whiplash from the White House, I called him back to ask: Does this change anything about the risk of a recession? 'From the perspective of the 'Recession Watch,' things haven't really changed much,' he said. 'The main discussion right now is whether this tariff policy, which is now mainly a trade war with China but also across-the-board 10% tariffs … is in and of itself enough to lead to a recession in the U.S.' I asked Bohr what he would tell the public during this ambiguous economic climate. He didn't have good news, but cautioned against reading too much into the 'erratic' swings of the market. 'There's as much uncertainty as there ever has been,' he said. 'Expect this volatility to keep happening in the stock market.' How is all this uncertainty affecting Californians? We asked, you answered. Dozens of our readers answered our survey this week, sharing their concerns about rising prices and the impact tariffs will have on their livelihoods. Here's what some of you had to say (edited for clarity and brevity): '[I worry about] being able to pay my rent because it is have food or have a home. I am afraid. I am old enough and wise enough to see [that] the president's behavior exhibits no concern for me and others, old and young, and our desire to live.' — Emily N., Fresno 'We bought a car two weeks ago in anticipation of prices going up because of tariffs. Our 401(k) and other investments are losing money. I feel the trade war is making our country and the world less safe. I am in my seventies; I can't believe this is how my life is going to end.' — Debra V., Thousand Oaks 'I recently started an [e-bike] business, and I had to pause pre-orders because I don't know what my final costs will be at port. I've given up hope of making a profit or even recouping my startup costs — I just hope to pass my e-bikes along to customers at cost and maybe close the business after that.' — Kate M., Visalia 'These new tariffs could quietly reshape everything we do at my work's interior design and retail store. So much of our work relies on finding unique, often vintage or handcrafted pieces from abroad. I'm also worried about us expanding and opening more retail outlets, because it just doesn't make sense to expand business in a contracting market.' — Noah V., San Diego County 'I can barely afford food and gas and utilities. I live a very simple life. If prices continue to rise, I will not be able to support my most basic needs. I run a service business that is modeled on people hiring me to help with their pets and homes while they are away. Since January my clients have been canceling bookings/travel and my income has dropped dramatically.' — Bernadette V., Eureka 'My husband and I are seniors. We barely make it now. Tariffs are terrifying and if we don't have our [Social Security] checks we will be in the streets. I seriously don't know how we will survive. I'm sure there are many in our position. How is this happening? I'm so scared.' — Rosemarie C., Pittsburg, Calif. 'The stress of watching the trade war and stock market is disconcerting. Many of the folks I know have just stopped watching the news… This is unprecedented. I am losing sleep.' — Laura R., Sebastopol 'I am mainly reacting with quiet panic. And despair. It is wholly demoralizing to work to shape our lives and our futures and our careers and our financial safety nets and our homes and our livelihoods — all while the bad economic policy of a megalomaniacal despot can tank all of it in a matter of a few weeks.' — Andrew B., Los Angeles Worried or wondering how Trump's trade war (however it shapes out) will affect you? Our survey is still open and we'd like to hear from you. We may feature your voice in upcoming editions of the newsletter. You can read more of The Times' trade war coverage here: Hantavirus caused three recent deaths in California. Here's what to know about the virus A rich L.A. neighborhood donated surveillance technology to the LAPD — then drama ensued Coachella 2025 kicks off this weekend. Everything you need to know What else is going on Get unlimited access to the Los Angeles Times. Subscribe here. A battle between California truckers leads to a twisted murder-for-hire plot. Authorities claim they hired a hit man to make a business competitor 'disappear.' What they didn't know was that the would-be assassin was talking to the FBI. Other must reads How can we make this newsletter more useful? Send comments to essentialcalifornia@ Going out Staying in Email us at essentialcalifornia@ and your response might appear in the newsletter this week. Show us your favorite place in California! Send us photos you have taken of spots in California that are special — natural or human-made — and tell us why they're important to you. Today's great photo is from former Times photographer Mel Melcon as part of a photo essay about how L.A.'s pay phones have faded into history. Have a great day, from the Essential California team Ryan Fonseca, reporterAndrew Campa, Sunday reporterKevinisha Walker, multiplatform editorHunter Clauss, multiplatform editorChristian Orozco, assistant editorKarim Doumar, head of newsletters Check our top stories, topics and the latest articles on
Los Angeles Times
09-04-2025
- Business
- Los Angeles Times
As Trump's trade war ramps up, what are Californians worried about? Let us know
Good morning. Here's what you need to know to start your day. President Trump's torrent of tariffs continues to tank the stock market as Wall Street reacts to an uncertain financial future amid an escalating trade war. Trump announced last week that the U.S. would slap a universal 10% tariff on imported goods from all foreign countries, in addition to existing tariffs imposed on Mexico, Canada and China. Some nations face higher rates, including the European Union and India. China and other countries have retaliated with tariffs of their own, which led Trump on Tuesday to threaten a 104% tariff on Chinese products beginning today (I'm writing this Tuesday, so you'll know better than me if that actually happened). What does all that mean for California? In short, higher prices and increased uncertainty given the volatile nature of Trump's actions so far. At the Sacramento level, Gov. Gavin Newsom is pursuing side deals with international trading partners and distancing California's economic policies from what's coming out of the White House. 'California is a stable trading partner and we hope you consider that as it relates to California-made products,' Newsom said in a video message aimed at international businesses posted to Bluesky. The trade war is also expected to cause pain at Los Angeles County's major ports, my colleague Laurence Darmiento reported. 'With Trump's across-the-board 10% tariffs worldwide and higher 'reciprocal' tariffs imposed on a number of Asian trading partners, economists say it's likely that one of the key drivers of the Los Angeles-area economy — trade — will be hit hard,' he wrote. Economists are on 'Recession Watch' For economist Clement Bohr, the uncertainty from an unpredictable federal government is the biggest problem. 'Nobody knows what is going to happen from one day to the next,' he said. 'That can be very destructive for the state of the economy.' Bohr is an assistant professor at UCLA and economist with the university's Anderson Forecast, which issued a 'Recession Watch' last month. It's like the flash flood watch we're used to seeing from the National Weather Service, but for a possible economic disaster. Bohr told me that he and fellow economists were paying attention to three specific actions from the Trump administration they worry could spiral into a recession — all Trump campaign promises: major tariffs on foreign goods, the 'largest deportation operation in American history' and the chainsaw approach of Elon Musk's Department of Government Efficiency. 'If he's actually able to implement all these things … that's a recipe for a recession,' Bohr said, 'because each of the policies are going to contract a different sector of the economy and together it's going to spill over to the broader economy.' Deportations and DOGE have been held in check to some extent, he said, but Trump's tariffs are a different story. 'They completely blew through the roof with the magnitude [that exceeded] expectations,' he said. 'Now … economic policy makers and economic forecasters are concerned that this tariff policy alone could lead the U.S. to be in a recession. That's what we're all trying to figure out at the moment.' So what should average Californians be worried about or bracing for right now? Bohr urged consumers not to overreact in the moment, since the stock market itself is reactive and policies can change. 'The main point for the average consumer today is to expect that prices are going to be more expensive for a lot of the everyday items that they will be buying,' he told me. 'They will effectively be poorer over the next year or so because the prices for their everyday goods are going to be higher.' I'll share more from my conversation with Bohr later this week — and I hope to hear from you too. Yes, you, reading this right now, worried or wondering about how Trump's tariffs and other economic policies will affect your life in the Golden State. What questions do you have about the tariffs and the fallout from them? Are you worried about a recession? If so, why and what are you doing to prepare? Maybe you're already feeling the impact and want to share your story. Let us know by taking this survey. You could see your experience or questions highlighted in upcoming editions of Essential California. Californians see undocumented immigrants as essential to the economy, a poll finds Schiff's first Senate bill proposes tax credit for hardening homes against fire, disasters Broadcast television is in trouble. Stations are asking Washington for help What else is going on Get unlimited access to the Los Angeles Times. Subscribe here. Canadian snowbirds love Palm Springs. But Trump is making them say: Sorry! We're leaving. The Coachella Valley has long been a favorite destination for Canadian snowbirds, who pump millions of dollars into the local economy every year. Now, its desert towns are bracing for a major financial blow as northerners — citing Trump's aggression toward Canada — cancel flights, ditch hotel and Airbnb reservations, and put their second homes up for sale. Other must-reads How can we make this newsletter more useful? Send comments to essentialcalifornia@ Going out Staying in Email us at essentialcalifornia@ and your response might appear in the newsletter this week. Show us your favorite place in California! Send us photos you have taken of spots in California that are special — natural or human-made — and tell us why they're important to you. Today's great photo is from Times food columnist Jenn Harris at Dodger Stadium, where several new food items are on the menu, including the $40 forearm-long hot dog. Have a great day, from the Essential California team Ryan Fonseca, reporterAndrew Campa, Sunday reporterKevinisha Walker, multiplatform editorHunter Clauss, multiplatform editorChristian Orozco, assistant editorKarim Doumar, head of newsletters Check our top stories, topics and the latest articles on
Forbes
09-04-2025
- Business
- Forbes
Forbes Recession Tracker: JPMorgan's Jamie Dimon Says Recession ‘Probably' Coming
The head of the U.S.' largest bank, economists and a former top-ranking White House economic official all warn the U.S. will likely tip into a recession as President Donald Trump's tariffs go into effect, reflecting the bloodbath on Wall Street over the last five days in response to the economic policies threatening to bring higher inflation and far weaker economic growth. In a Wednesday morning interview, JPMorgan Chase CEO Jamie Dimon told Fox Business' 'Mornings With Maria' he believes a tariff-spurred recession is 'probably' a 'likely outcome,' adding he's heard 'recessionary talk' in conversations with other business leaders. 'We haven't had any slowdown or real so long,' Dimon continued, adding he expects 'more credit problems than people have seen in a long time.' Lawrence Summers, the former Treasury Secretary during President Bill Clinton's term, told Bloomberg on Tuesday it's 'more likely than not' the tariffs will send the U.S. into a recession, adding to a growing chorus of economists sounding that warning. Summers predicted such a downturn would leave an additional 2 million Americans unemployed, a more than 28% increase from the 7.1 million unemployed Americans in March, and a $5,000 or greater decline in annual household income. Goldman Sachs economists hiked their odds of a recession over the next year to 45% in a downbeat note to clients Sunday, far higher than the 20% probability they held in late March and cautioning that without any capitulation from Trump, their baseline economic forecast is for a recession. Economists at JPMorgan, the U.S.' largest bank by assets and market capitalization, issued an even starker 60% recession odds in a scathing Friday note, labeling Trump's policies as the 'largest tax increase' since 1968 which will 'fall heavily on the US consumer.' 'The fact that everything is sort of happening under the [International Emergency Economic Powers Act] and there's sort of no process is adding to the uncertainty,' Arend Kapteyn, UBS Investment Bank's chief economist, told reporters Monday, adding numerous economic surveys are 'already effectively at recessionary levels,' surpassing those seen during the height of the Great Recession. The UCLA Anderson School of Management published last month an official 'Recession Watch' for the first time in its 73 years of economic forecasts, as economist Clement Bohr issued a scathing assessment of Trump's economic policies, writing the Recession Watch 'serves as a warning to the current administration: Be careful what you wish for because, if all your wishes come true, you could very well be the author of a deep recession.' A recession is 'entirely avoidable' if Trump's signature economic policies, including the most severe tariffs in nearly a century and the public sector's dismantling at the hands of Elon Musk's Department of Government Efficiency (DOGE), are 'pared back or phased in more gradually,' according to Bohr. Stock prices don't completely correlate with economic growth, but equity investors are clearly pricing in significantly increased odds of a down stretch for the U.S. economy. The S&P 500 briefly dove into a 20% bear market earlier Monday, wiping out about $10 trillion in market value, led by stocks considered the most vulnerable to a slowdown, including artificial intelligence darling Nvidia and Elon Musk's Tesla. But markets are still pricing 'nowhere close to the worst case' scenario, Bhanu Baweja, UBS Investment Bank's chief strategist, said Monday. Ahead of the 'Liberation Day' announcement last week, Trump braced Americans for a possible recession. In a Fox News interview aired March 9, he would not rule out the possibility of a recession, cautioning Americans for a period of economic 'transition' as his policies take hold and noting he's paying little attention to stock market losses. In subsequent media appearances, Treasury Secretary Scott Bessent similarly declined to dismiss a potential recession and said the U.S. will go through a 'detox period.' Bessent told NBC's 'Meet the Press' in an interview he believes it 'would have been much healthier if someone had put the brakes' on ahead of the Great Recession. 'Be Strong, Courageous, and Patient, and GREATNESS will be the result!,' Trump wrote on his Truth Social platform Monday. The technical definition of a recession is two consecutive quarters of negative growth in gross domestic product, a comprehensive measure of all goods and services produced in a country. The official quarterly GDP stats haven't turned negative yet, but the Atlanta Federal Reserve's real-time model ignited concerns by calling for -1.8% annual GDP growth in 2025's first quarter, which would be the worst reading since 2020—though the estimate is likely skewed by its methodology, including how it accounts for a surge in gold imports. Elsewhere in financial markets, a flight to government-issued debt is evidence of a thirst for safer returns in the face of a potential recession, as yields for benchmark 10-year Treasury bonds have dropped by more than 30 basis points over the past two months (lower yields mean bonds got more valuable). But the most common bond market signal of a recession, the inversion of the yield curve, in which longer-term bonds have lower yields than shorter-dated ones, has actually normalized in recent months. The New York Fed's bond-linked recession model calls for just 30% recession odds over the next year, down from the more than 70% odds in late 2023, a period which failed to materialize into a full-blown recession. Perhaps the most concerning signal over the last is a breakdown in everyday Americans' conviction in the economy, as the Conference Baord's closely watched consumer confidence survey tumbled this month to its lowest level since 2021. That tracks with weaker spending, as February retail sales grew by just 0.2% from January to February, according to a report released March 17 by the Census Bureau, far worse than the 0.6% month-over-month increase projected by economists. One of the most important hallmarks of the American economy, the labor market has shown some cracks in early 2025 as job creation slowed and layoffs spiked, but remains overwhelmingly strong, as March's 4.2% unemployment rate sits well within the healthy historic norm. A key labor market recession indicator, the Sahm rule, flashes a far lower likelihood of a recession than it did when it peaked last summer, inspiring a short-lived market selloff in August. Trading in two of the world's most precious commodities certainly point to the prospect of a global recession. Gold prices are up more than 10% this year to a record $3,000 per troy ounce as investors flood into the historic safe haven asset, while prices for international benchmark Brent Crude sank this month to their lowest point since 2021 as traders braced for a potential global weakening in oil demand as economic activity slows. Bessent and Trump have made clear they are lasered in on lowering interest rates, which are determined by the politically independent Fed. Typically, rates are only drastically cut during periods of economic distress, as lower rates typically stimulate economic growth as households and businesses are more likely to borrow with lower interest costs, though that uptick in loan activity can simultaneously lead to higher inflation as demand rises. The Fed is likely to hold off on further rate cuts 'until tariff policy becomes clearer,' according to David Mericle, Goldman's chief U.S. economist. Bank of America's monthly survey of global fund managers released this month revealed some 63% of these influential investors expect the global economy to weaken over the next year, making March the second biggest jump in macroeconomic pessimism since the poll's 1994 inception. The survey also revealed fund managers fled to cash this month at the highest rate since March 2020 and moved away from U.S. stocks at their fastest pace on record, signaling an unraveling of faith in stateside equities. The fund managers heavily agree White House policy is the single biggest risk, with 55% of respondents citing a tariff-driven trade war sending the global economy into a recession as the top threat and 13% naming actions from Elon Musk's Department of Government Efficiency sending the U.S. into a recession as the biggest risk. The Bank of America survey was conducted March 7-13 among 205 global fund managers who collectively manage $477 billion in assets. One Community. Many Voices. Create a free account to share your thoughts. Our community is about connecting people through open and thoughtful conversations. We want our readers to share their views and exchange ideas and facts in a safe space. In order to do so, please follow the posting rules in our site's Terms of Service. We've summarized some of those key rules below. Simply put, keep it civil. Your post will be rejected if we notice that it seems to contain: User accounts will be blocked if we notice or believe that users are engaged in: So, how can you be a power user? Thanks for reading our community guidelines. Please read the full list of posting rules found in our site's Terms of Service.
Forbes
08-04-2025
- Business
- Forbes
Forbes Recession Tracker: Clinton's Treasury Chief Expects 2 Million More Unemployed Americans In ‘Likely' Downturn
Economists at the U.S.' largest banks, and a former top-ranking White House official, warn the U.S. will likely tip into a recession as President Donald Trump's tariffs go into effect, reflecting the bloodbath on Wall Street over the last five days in response to the economic policies which threaten to bring higher inflation and far weaker economic growth. Lawrence "Larry" Summers, the Treasury Secretary under President Bill Clinton, speaks at the Aspen ... More Institute in 2015. Lawrence Summers, the former Treasury Secretary during President Bill Clinton's term, told Bloomberg on Tuesday it's 'more likely than not' the tariffs will send the U.S. into a recession, adding to a growing chorus of economists sounding that warning. Summers predicted such a downturn would leave an additional 2 million Americans unemployed, a more than 28% increase from the 7.1 million unemployed Americans in March, and a $5,000 or greater decline in annual household income. Goldman Sachs economists hiked their odds of a recession over the next year to 45% in a downbeat note to clients Sunday, far higher than the 20% probability they held in late March and cautioning that without any capitulation from Trump, their baseline economic forecast is for a recession. Economists at JPMorgan, the U.S.' largest bank by assets and market capitalization, issued an even starker 60% recession odds in a scathing Friday note, labeling Trump's policies as the 'largest tax increase' since 1968 which will 'fall heavily on the US consumer.' 'The fact that everything is sort of happening under the [International Emergency Economic Powers Act] and there's sort of no process is adding to the uncertainty,' Arend Kapteyn, UBS Investment Bank's chief economist, told reporters Monday, adding numerous economic surveys are 'already effectively at recessionary levels,' surpassing those seen during the height of the Great Recession. The UCLA Anderson School of Management published last month an official 'Recession Watch' for the first time in its 73 years of economic forecasts, as economist Clement Bohr issued a scathing assessment of Trump's economic policies, writing the Recession Watch 'serves as a warning to the current administration: Be careful what you wish for because, if all your wishes come true, you could very well be the author of a deep recession.' A recession is 'entirely avoidable' if Trump's signature economic policies, including the most severe tariffs in nearly a century and the public sector's dismantling at the hands of Elon Musk's Department of Government Efficiency (DOGE), are 'pared back or phased in more gradually,' according to Bohr. Stock prices don't completely correlate with economic growth, but equity investors are clearly pricing in significantly increased odds of a down stretch for the U.S. economy. The S&P 500 dove into a 20% bear market earlier Monday, wiping out about $10 trillion in market value, led by stocks considered the most vulnerable to a slowdown, including artificial intelligence darling Nvidia and Elon Musk's Tesla. But markets are still pricing 'nowhere close to the worst case' scenario, Bhanu Baweja, UBS Investment Bank's chief strategist, said Monday. Ahead of the 'Liberation Day' announcement last week, Trump braced Americans for a possible recession. In a Fox News interview aired March 9, he would not rule out the possibility of a recession, cautioning Americans for a period of economic 'transition' as his policies take hold and noting he's paying little attention to stock market losses. In subsequent media appearances, Treasury Secretary Scott Bessent similarly declined to dismiss a potential recession and said the U.S. will go through a 'detox period.' Bessent told NBC's 'Meet the Press' in an interview he believes it 'would have been much healthier if someone had put the brakes' on ahead of the Great Recession. 'Be Strong, Courageous, and Patient, and GREATNESS will be the result!,' Trump wrote on his Truth Social platform Monday. The technical definition of a recession is two consecutive quarters of negative growth in gross domestic product, a comprehensive measure of all goods and services produced in a country. The official quarterly GDP stats haven't turned negative yet, but the Atlanta Federal Reserve's real-time model ignited concerns by calling for -1.8% annual GDP growth in 2025's first quarter, which would be the worst reading since 2020—though the estimate is likely skewed by its methodology, including how it accounts for a surge in gold imports. Elsewhere in financial markets, a flight to government-issued debt is evidence of a thirst for safer returns in the face of a potential recession, as yields for benchmark 10-year Treasury bonds have dropped by more than 30 basis points over the past two months (lower yields mean bonds got more valuable). But the most common bond market signal of a recession, the inversion of the yield curve, in which longer-term bonds have lower yields than shorter-dated ones, has actually normalized in recent months. The New York Fed's bond-linked recession model calls for just 30% recession odds over the next year, down from the more than 70% odds in late 2023, a period which failed to materialize into a full-blown recession. Perhaps the most concerning signal over the last is a breakdown in everyday Americans' conviction in the economy, as the Conference Baord's closely watched consumer confidence survey tumbled this month to its lowest level since 2021. That tracks with weaker spending, as February retail sales grew by just 0.2% from January to February, according to a report released March 17 by the Census Bureau, far worse than the 0.6% month-over-month increase projected by economists. One of the most important hallmarks of the American economy, the labor market has shown some cracks in early 2025 as job creation slowed and layoffs spiked, but remains overwhelmingly strong, as March's 4.2% unemployment rate sits well within the healthy historic norm. A key labor market recession indicator, the Sahm rule, flashes a far lower likelihood of a recession than it did when it peaked last summer, inspiring a short-lived market selloff in August. Trading in two of the world's most precious commodities certainly point to the prospect of a global recession. Gold prices are up more than 10% this year to a record $3,000 per troy ounce as investors flood into the historic safe haven asset, while prices for international benchmark Brent Crude sank this month to their lowest point since 2021 as traders braced for a potential global weakening in oil demand as economic activity slows. Bessent and Trump have made clear they are lasered in on lowering interest rates, which are determined by the politically independent Fed. Typically, rates are only drastically cut during periods of economic distress, as lower rates typically stimulate economic growth as households and businesses are more likely to borrow with lower interest costs, though that uptick in loan activity can simultaneously lead to higher inflation as demand rises. The Fed is likely to hold off on further rate cuts 'until tariff policy becomes clearer,' according to David Mericle, Goldman's chief U.S. economist. Bank of America's monthly survey of global fund managers released this month revealed some 63% of these influential investors expect the global economy to weaken over the next year, making March the second biggest jump in macroeconomic pessimism since the poll's 1994 inception. The survey also revealed fund managers fled to cash this month at the highest rate since March 2020 and moved away from U.S. stocks at their fastest pace on record, signaling an unraveling of faith in stateside equities. The fund managers heavily agree White House policy is the single biggest risk, with 55% of respondents citing a tariff-driven trade war sending the global economy into a recession as the top threat and 13% naming actions from Elon Musk's Department of Government Efficiency sending the U.S. into a recession as the biggest risk. The Bank of America survey was conducted March 7-13 among 205 global fund managers who collectively manage $477 billion in assets.
