Recession Monitor – US border taxes, domestic consequences

The tariffs announced by the US administration will push the economy close to a recession this year – any further escalation would warrant adding a recession to our baseline forecast.

Our internal models show a rapid rise in the probability of recession over the next six months. For the time being, the weakness can only be seen in surveys, but we think it’s only a matter of time before consumer and business uncertainty shows up as a deterioration in the hard data.

Consumer spending will slow sharply as households’ real incomes stagnate and precautionary saving increases amid a loss of confidence and negative wealth effects. Business investment and hiring will slow in light of the policy uncertainty.

The April forecast leaves the unemployment rate on track to breach the ‘Sahm rule’ recession threshold by September. Although the economy may skirt a technical recession, the impending economic slowdown could feel like one for many households and businesses.

Discover how these economic shifts might affect you and your business.