U.S. recession odds rise to 35% after tariff impacts
- Alec Kersman from Pimco announced a 35% chance of the U.S. entering a recession this year.
- The probability has increased from 15% since last December, mainly due to tariff impacts.
- Despite these concerns, there are indicators suggesting continued economic growth in the U.S.
In the context of heightened economic concern, Alec Kersman, managing director and head of Asia-Pacific at Pimco, indicated there is a 35% chance of the United States entering a recession in 2025. This assertion was made during CNBC's CONVERGE LIVE event in Singapore on March 12, 2025. Kersman noted an increase in recession probability from about 15% estimated in December 2024, attributing this shift primarily to the ongoing impact of tariffs introduced by President Donald Trump. Tariffs have created uncertainty, negatively affecting stock markets, and altering consumer behavior, contributing to rising fears of economic downturns among households and businesses alike. Despite these concerns, Kersman also mentioned that Pimco's base case scenario shows expected U.S. GDP growth of 1% to 1.5% for the year. This reveals a minor expansion amidst tariff-induced challenges. Concurrently, Kamal Bhatia, president and CEO of Principal Asset Management, argued that increased domestic spending could counterbalance tariff impacts, potentially yielding better-than-expected GDP outcomes. He emphasized that consumer spending constitutes a significant portion of the U.S. economy and could improve due to shifts toward local spending influenced by geopolitical tensions. Additionally, signs from economic indicators suggested a possible continuation of growth rather than imminent recession. A report from ZipRecruiter's chief economist, Julia Pollack, shed light on four out of six economic indicators that still reflect an expansion. However, consumer confidence has dipped, creating an environment where fears of recession can gain traction. The rising tension surrounding trade and tariffs has inevitably prompted discussions about recession preparedness among consumers and businesses alike. Experts urge individuals to enhance their saving practices and remain proactive in managing retirement investments amid fluctuating market conditions. As the U.S. navigates these evolving economic waters, financial analysts anticipate a complicated relationship between consumer spending, economic policies, and market stability, bringing both challenges and opportunities in the months ahead.