Follow us on social media
While many individuals are talking about a recession in the United States, we believe that this is an unlikely scenario.
Every time there is economic uncertainty, analysts are quick to mention the risk of economic recession. This time is no different and the trade tariffs decided by president Trump have economists to turn quite negative on the US economy as they now are fearing the risk of a recession. The US GDP growth forecast for 2025 has dropped from 2.3% in february to 2.0% in march. The risk of recession has increased from 20% to 30% according to economists.
We do not share this view. Recessions do not come out of nowhere and there must be "ingredients" for these to happen. The current low unemployment numbers in the United States do not justify a significant drop in consumer spending while the high profitability and low debt levels of companies do not warrant a significant decrease in corporate spending. Consumers and companies may defer spending but this is temporary. Once confidence returns, their spending will resume as their financial ability to spend is intact.
Investors should not mistake a "normal" market correction for a sign of imminent recession.