"Moody's: 45% Chance of U.S. Recession Within 12 Months as Risk Reaches Worrisome Levels"

# Moody's Economist Warns of Rising U.S. Recession Risks, Highlights Machine Learning Model Predictions Mark Zandi, Chief Economist at Moody’s Analytics, has issued a stern warning about the increasing risk of a U.S. economic recession. Based on Moody's advanced machine learning model, there is now a 45% probability that the U.S. could enter a recession within the next 12 months. On May 28, Zandi posted his concerns on X (formerly Twitter), stating, “The risk of recession is uncomfortably high. Our machine learning model puts the odds of a recession starting within the next year at 45%. While it’s fortunate the probability doesn't exceed 50%, it remains alarmingly high.” Typically, in a stable economic environment, this probability is around 15%. # Machine Learning Model Nears Critical Threshold Moody's model integrates various economic indicators to predict recession probabilities. Historically, readings over 50% in this model have coincided with actual recessions. The current rise in recession risk, approaching the 50% threshold, is highly concerning. This spike in recession likelihood is largely due to broader global economic stress. Continued trade conflicts are a significant factor. Recent negotiations between the U.S. and key trade partners have somewhat eased tensions, but these conflicts still hinder economic growth. # Moody’s Downgrades U.S. Credit Outlook On May 16, Moody’s downgraded the U.S. government’s credit outlook from "stable" to "negative," pointing to rising national debt, widening deficits, and deteriorating governance. This decision highlights the increasing pressures on the U.S. government amidst fiscal challenges. In times of heightened trade tensions, like those seen recently, Moody’s has estimated that U.S. recession risks could surpass 60% by 2025. # Divergent Views on Recession Risks Recession forecasts vary among institutions. JP Morgan initially rated recession probabilities as high but later reduced them to below 50% following progress in U.S.-China trade negotiations. Conversely, economist Steve Hanke maintains a more pessimistic view, attributing a potential downturn mainly to tariff policies from the Trump administration, positing the likelihood of a U.S. recession at 90%. With both domestic and global economic conditions remaining uncertain, experts recommend continued vigilance in monitoring these risks alongside changing macroeconomic indicators.