The U.S. economy is facing a significant slowdown driven by aggressive tariff policies, with economists predicting a recession probability near 50%. A short pause in tariffs has not improved business sentiment, which is further weakened by escalating trade tensions with China. Inflation forecasts have surged, limiting potential Federal Reserve rate cuts. Most economists have downgraded growth predictions for 2025 to just 1.4%, highlighting increased consumer anxiety regarding spending amid a toxic environment of rising prices and job insecurity.
Sentiment is incredibly weak right now and that points to households being very nervous about spending... Prices, jobs and wealth are all moving against the consumer and that is a pretty toxic combination for consumer spending growth going forward.
That's the real issue for U.S. growth that raises the recession risk... The lack of clarity on the trading environment faced by U.S. companies makes them naturally more wary about putting money to work in the U.S. economy.
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