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U.S. dollar banknotes and a label with the word “Recession” are seen in this illustration taken March 19, 2025. Dado Ruvic | Reuters Chances that the U.S. is heading for a recession are close to 50-50, according to a Deutsche Bank survey that raises more questions about the direction of the U.S. economy. The probability of a downturn in growth over the next 12 months is about 43%, as set by the average view of 400 respondents during the period of March 17-20. Though unemployment remains low and most data points suggest continuing if not slowing growth, the survey results reinforce the message from sentiment surveys that consumers and business leaders are increasingly concerned that a slowdown or recession is a growing risk. Federal Reserve Chair Jerome Powell last week acknowledged the worries but said he still sees the economy as “strong overall” featuring “significant progress toward our goals over the past two years.” Still, Powell and his colleagues at the two-day policy meeting that concluded Wednesday lowered their estimate for gross domestic product this year to just a 1.7% annualized gain. Excluding the Covid-induced retrenchment in 2020, that would be the worst growth rate since 2011. Additionally, Fed officials raised their outlook for core inflation to 2.8%, well above the central bank’s 2% goal, though they still expect to achieve that level by 2027. The combination of higher inflation and slower growth raise the specter of stagflation, a phenomenon not experienced since the early 1980s. Few economists see that era replicated in the current environment, though the probability is rising of a policy challenge where the Fed might have to choose between boosting growth and tamping down prices. Markets have been nervous in recent weeks about the prospects ahead. Bond expert Jeffrey Gundlach at DoubleLine Capital told CNBC a…

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Filed under: News - @ March 25, 2025 2:25 pm