Wall Street is raising the probability that the US economy will slip into a recession, with some economists seeing 50-50 odds. That’s as President Donald Trump shows no signs of backing down on his aggressive tariff plans, including reciprocal duties set to take effect in a few weeks.
The likelihood that the US economy will slip into a recession is rising on Wall Street, with some economists even seeing 50-50 odds.
JPMorgan chief economist Bruce Kasman told reporters in Singapore on Wednesday that he now sees a roughly 40% recession risk, up from about 30% at the start of the year.
But he added that recession odds would rise to 50% or above if President Donald Trump’s planned reciprocal tariffs, which are due to take effect April 2, meaningfully come in to force.
«If we would continue down this road of what would be more disruptive, business-unfriendly policies, I think the risks on that recession front would go up,» Kasman said.
Meanwhile, former Treasury Secretary Larry Summers warned that the chances of a recession are about 50%, citing Trump’s tariffs, immigration crackdown, and mass federal layoffs, which are combining to cause sharp reductions in consumer and business spending plans.
When economic forecasts start being revised in a certain direction, there tends to be momentum, he told Bloomberg TV on Tuesday. And all the revisions are going toward less growth.
«I think we’ve got a real uncertainty problem,» Summers added. «I think it’s going to be hard to fix that. And we’re looking at a slowdown relative to what was forecast almost for sure and serious near-50% prospect of recession.»
Moody’s Analytics chief economist Mark Zandi raised his recession odds to 35% from 15% at the start of the, citing tariffs.
But if Trump follows through with his tariff plans and stays there for more than a few months, that would be enough to push the economy into recession, he told Bloomberg TV on Wednesday.
For now, he has hope that negotiations will lead to tariffs getting reeled back in, which is keeping his forecast below 50%.
«But I don’t say that with any confidence with each passing day,» Zandi said. «And of course, the uncertainty around all of this is doing damage.»
In fact, surveys of consumers and businesses show that they are turning increasingly gloomy about the economy amid tariff uncertainty and mass federal layoffs. Even executives in deep-red states that voted for Trump say seeing business conditions are collapsing.
Elsewhere on Wall Street, recession probabilities aren’t as high, but they are rising sharply. Market gurus Ed Yardeni and Eric Wallerstein said earlier this month that they see odds of a bear market and a tariff-induced recession at 35%, up from 20%.
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