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Forbes
07-04-2025
- Business
- Forbes
Forbes Recession Tracker: Goldman, JPMorgan Say Recession Incoming If Trump Doesn't Blink On Tariffs
Economists at the U.S.' largest banks 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. P{resident Donald Trump speaks to reporters while in flight Sunday on Air Force One. 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.' There's a growing chorus of economists warning about the prospect of Trump sending the U.S. into an avoidable downturn. 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. Moody's Analytics' chief economist Mark Zandi struck a similar chord in a March 19 interview on CNN's 'Early Start with Rahel Solomon,' saying it 'feels like we're being pushed into recession' by Trump. 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. 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.
Forbes
31-03-2025
- Business
- Forbes
Forbes Recession Tracker: Recession Odds Spike As Trump's Tariff ‘Liberation Day' Approaches
Several economists warn the Trump administration may tip the U.S. into an unnecessary recession, as President Donald Trump and his top economic official's refuse to rule out a recession, rattling Wall Street and consumers — and the data below will help gauge exactly how close the economy may be coming to a tipping point. Goldman Sachs economists hiked their odds of a recession over the next year from 20% to 35% in a downbeat note to clients Sunday, raising their forecasts for inflation and unemployment and cutting their economic growth prediction; JPMorgan economists have an even more pessimistic 40% recession probability. The UCLA Anderson School of Management published earlier this 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. Moody's Analytics' chief economist Mark Zandi struck a similar chord in a March 19 interview on CNN's 'Early Start with Rahel Solomon,' saying it 'feels like we're being pushed into recession' by Trump. 'The recession risks are uncomfortably high and they're rising,' declared Zandi, adding he believes the odds of a recession are 'less than 50-50, but it really does depend on the president and what he does here.' Trump braced Americans for a possible recession in a Fox News interview aired March 9, when 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 out Sunday he believes it 'would have been much healthier if someone had put the brakes' on ahead of the Great Recession. The likelihood of a recession 'has moved up but it's not high,' Jerome Powell, chair of the Federal Reserve and the highest-ranking monetary policy official, told reporters Wednesday, quelling fears in a downtrodden economic news cycle. 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. Stock prices don't completely correlate with economic growth, but equity investors are clearly pricing in increased odds of a down stretch for the U.S. economy. The S&P 500 dove into a 10% correction earlier this month, wiping out some $5 trillion in market value in less than a month's time, led by stocks considered the most vulnerable to a slowdown, including artificial intelligence darling Nvidia and Elon Musk's Tesla. 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. 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 25 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 27% 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 February's 4.1% 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 $3,100 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. 'Cracks are forming in the economy's foundation,' Lydia Boussour, senior economist at EY-Parthenon, wrote in emailed comments Monday. 'While we don't anticipate an outright pullback in consumer spending, recession risks are rising,' Boussour continued. 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.
Yahoo
24-02-2025
- Business
- Yahoo
Victims of LA wildfires who lost their homes are looking to relocate. Here are the top cities they're looking at
The wildfires that ripped through Los Angeles in early 2025 were among the most devastating the region had ever seen. Data from UCLA Anderson School of Management reveals that property and capital losses from the fires could range upwards of $164 billion, with insured losses at an estimated $75 billion. Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Home prices in America could fly through the roof in 2025 — here's the big reason why and how to take full advantage (with as little as $10) As of early February, it was estimated that the wildfires destroyed more than 16,240 properties, including residential homes and commercial buildings. The Palisades Fire destroyed 6,822 properties in the Malibu and Pacific Palisades communities and the Eaton Fire razed 9,418. While some homeowners may be looking to rebuild in their communities once the dust settles, others — particularly the wealthy — are looking elsewhere. Celebrity real estate agent Josh Altman of 'Million Dollar Listing' fame says he believes 70% of Palisades residents will not return to that community in the wake of the fires. His wealthier clients can afford to relocate. Many of his Palisades clients ready to move want to stay in California and are looking at high-priced properties in: Santa Monica Brentwood Beverly Hills Lower Bel Air Newport Beach With the exception of Newport Beach, all of these are relatively close to the Palisades area, so Altman's clients may want to maintain a semblance of familiarity. They are among the privileged clientele who can afford to do so. Zillow put the average Santa Monica home value at $1,673,029. For Beverly Hills, it's $3,453,888. In Brentwood, it's $2,758,838. In Newport Beach, it's $3,321,652. And Bel Air has the highest average home value at $3,855,639. The danger of these communities is that they are still in Los Angeles County, which is at ongoing risk of wildfires. However, they may be somewhat safer options than the Palisades, where homes were destroyed because they were located near brush and vegetation. Moving away from that area does mitigate the risk of wildfires somewhat. In contrast, some of Altman's clients are looking to leave California entirely and move to Scottsdale or Las Vegas. They're also looking at lower property costs. Read more: Jamie Dimon issues a warning about the US stock market — says prices are 'kind of inflated.' Crashproof your portfolio with these 3 rock-solid strategies The average home in Scottsdale, AZ costs $827,308. In Las Vegas, it's a more reasonable $425,474. So that may be a destination for displaced wildfire victims who aren't loaded with money. For homeowners of modest means, rebuilding may not be an option due to lack of insurance. Between 2020 and 2022, California insurers declined to renew 2.8 million homeowners policies, of which 531,000 were in Los Angeles County. The Standford Daily reports that more than 100,000 Californians lost access to private homeowner insurance, affecting one in seven homeowners in the Palisades. Even homeowners who have insurance may not be able to rebuild in their communities. Amy Bach, executive director of the nonprofit consumer advocacy group United Policyholders, told CNBC that two-thirds of LA wildfire victims or more are underinsured. And if their insurance won't cover the full cost of rebuilding, they might have to go someplace where it's cheaper to buy or build a home. For those who can afford to rebuild in the Palisades, experts warn that the process could take years due to the region's hilly, rocky terrain. It will take time to collect and remove toxic materials on the surface. Meanwhile toxins, ash and debris from the wildfires seep into the earth and contaminate the water system. "It will probably take months until communities have reliable drinking water again," says Thomas Young, a civil and environmental engineering professor at the University of California, Davis. On top of financial and logistical barriers to rebuilding, the psychological toll of the fires may be driving people to relocate instead of rebuilding in the Palisades. It could take survivors a long time to recover from that trauma. A fresh start somewhere else may not only be a more affordable and safe option, but a preferable one from a mental health perspective. Is your savings account struggling to keep up with soaring grocery prices? Here's how 2 minutes can earn you 9X the US national average — with no monthly fees This self-made $500M real estate mogul reveals his 'essential' US portfolio that he says Amazon 'can't hurt' — here's how everyday investors can copy his secret formula These 5 money moves will boost you up America's net worth ladder in 2025 — and you can complete each step within minutes. Here's how This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
