Financial Markets and Rising Recession Risks

Analyzing the Growing Probability of Economic Downturns

Posted 9 months ago

Recession Risks Increasing in Financial Markets

The article discusses recent signals from financial markets indicating a rising risk of recession, stemming from tariff uncertainties and signs of economic weakness.

Key Points Covered

JPMorgan's model shows recession probability rising to 31%.
Goldman Sachs also indicates growing recession risks at 23%.
Economic sentiment is declining among business leaders and investors.
Consumer confidence and factory activity are weakening.
Contrasting signs exist, such as low unemployment rates.

Market Assessments

Indicator	Current Probability	Last Month
JPMorgan Model	31%	17%
Goldman Sachs Model	23%	14%
Investment-Grade Credit Market	8%	~0%
Five-Year Treasuries and Base Metals	50%	N/A

Expert Opinions

Several analysts are expressing concerns regarding the likelihood of a recession:

Mohamed A. El-Erian: Estimates a 25%-30% chance of recession, up from 10% earlier this year.
Nikolaos Panigirtzoglou (JPMorgan): Warns of risks to business and consumer confidence due to tariffs.
Christian Mueller-Glissmann (Goldman Sachs): Notes that Fed cuts and yield curve movements suggest recession risks.

Current Economic Climate

Despite the looming fears, some positive economic indicators remain:

Unemployment rate is stable around 4%.
Income levels show strength amidst concerns.

Cayla Seder from State Street Global Markets cautions against interpreting soft data as an indication of a decline in economic growth.