Saudi Press

Saudi Arabia and the world
Thursday, Dec 18, 2025

US economy could be headed toward recession, economist warns: '100% odds' of global slowdown

US economy could be headed toward recession, economist warns: '100% odds' of global slowdown

Rising interest rates and soaring inflation could dampen consumer spending

The U.S. economy could be barreling toward a recession in the next year, as persistently high inflation and an increasingly hawkish Federal Reserve weighs on growth.

Greg Daco, chief economist at EY-Parthenon, warned in a new analyst note that the odds of an economic downturn in the U.S. over the course of the next year are somewhere between 35% and 40%.

There's an even greater risk of a global downturn.

"A U.S. recession is unlikely in the very near term, but there are several uncertainties on the horizon," Daco wrote. "While I put the odds of a U.S. recession somewhere around 35-40% in the next 12 months, the odds of a material global growth slowdown are close to 100% in the next six months."

While the U.S. economy remains strong in the interim, "cracks are starting to appear in the foundation," he wrote. Sky-high inflation, rising interest rates and depressed financial markets are likely to weigh on consumer spending in coming months. Consumer spending accounts for about two-thirds of gross domestic product, the broadest measure of goods and services produced in the nation.

A man shops at a Safeway grocery store in Annapolis, Md., May 16, 2022.


"With the Fed tightening the monetary policy spigot with increased determination and the global economic outlook turning bleaker, the U.S. economy will grow more susceptible to a downturn in the coming months," Daco wrote.

Economic growth in the U.S. is already slowing. The Bureau of Labor Statistics reported earlier this month that gross domestic product unexpectedly shrank in the first quarter of the year, marking the worst performance since the spring of 2020, when the economy was still deep in the throes of the COVID-induced recession.

The analysis comes amid growing fears on Wall Street that the Fed may drag the economy into a recession as it seeks to tame inflation, which climbed by 8.3% in April, near a 40-year high. Bank of America, as well as Fannie Mae and Deutsche Bank, are among the Wall Street firms forecasting a downturn in the next two years, along with former Fed Chairman Ben Bernanke.

"The Fed is attempting to thread the needle while wearing boxing gloves and a mouth guard, which reduces its degrees of freedom to act without causing damage to the real economy," said RSM Chief Economist Joe Brusuelas, who has questioned whether the central bank will be able to achieve a soft landing.

Policymakers raised the benchmark interest rate by 50 basis points earlier this month for the first time in two decades and have signaled that more, similarly-sized rate hikes are on the table at coming meetings as they rush to catch up with inflation.

Federal Reserve Chairman Jerome Powell, right, testifies before the Senate Banking Committee on Capitol Hill. 


Fed Chairman Jerome Powell has acknowledged there could be some "pain associated" with reducing inflation and curbing demand but has pushed back against the notion of an impending recession, identifying the labor market and strong consumer spending as bright spots in the economy. Still, he has warned that a soft landing is not assured.

"It's going to be a challenging task, and it's been made more challenging in the last couple of months because of global events," Powell said Wednesday during a Wall Street Journal live event, referring to the Ukraine war and COVID lockdowns in China.

But he added that "there are a number of plausible paths to having a soft or softish landing. Our job isn't to handicap the odds, it's to try to achieve that."

Newsletter

Related Articles

Saudi Press
0:00
0:00
Close
Saudi Hotels Prepare for New Hospitality Roles as Alcohol Curbs Ease
Global Airports Forum Highlights Saudi Arabia’s Emergence as a Leading Aviation Powerhouse
Saudi Arabia Weighs Strategic Choice on Iran Amid Regional Turbulence
Not Only F-35s: Saudi Arabia to Gain Access to the World’s Most Sensitive Technology
Saudi Arabia Condemns Sydney Bondi Beach Shooting and Expresses Solidarity with Australia
Washington Watches Beijing–Riyadh Rapprochement as Strategic Balance Shifts
Saudi Arabia Urges Stronger Partnerships and Efficient Aid Delivery at OCHA Donor Support Meeting in Geneva
Saudi Arabia’s Vision 2030 Drives Measurable Lift in Global Reputation and Influence
Alcohol Policies Vary Widely Across Muslim-Majority Countries, With Many Permitting Consumption Under Specific Rules
Saudi Arabia Clarifies No Formal Ban on Photography at Holy Mosques for Hajj 2026
Libya and Saudi Arabia Sign Strategic MoU to Boost Telecommunications Cooperation
Elon Musk’s xAI Announces Landmark 500-Megawatt AI Data Center in Saudi Arabia
Israel Moves to Safeguard Regional Stability as F-35 Sales Debate Intensifies
Cardi B to Make Historic Saudi Arabia Debut at Soundstorm 2025 Festival
U.S. Democratic Lawmakers Raise National Security and Influence Concerns Over Paramount’s Hostile Bid for Warner Bros. Discovery
Hackers Are Hiding Malware in Open-Source Tools and IDE Extensions
Traveling to USA? Homeland Security moving toward requiring foreign travelers to share social media history
Wall Street Analysts Clash With Riyadh Over Saudi Arabia’s Deficit Outlook
Trump and Saudi Crown Prince Cement $1 Trillion-Plus Deals in High-Profile White House Summit
Saudi Arabia Opens Alcohol Sales to Wealthy Non-Muslim Residents Under New Access Rules
U.S.–Saudi Rethink Deepens — Washington Moves Ahead Without Linking Riyadh to Israel Normalisation
Saudi Arabia and Israel Deprioritise Diplomacy: Normalisation No Longer a Middle-East Priority
Saudi Arabia Positions Itself as the Backbone of the Global AI Era
As Trump Deepens Ties with Saudi Arabia, Push for Israel Normalization Takes a Back Seat
Thai Food Village Debuts at Saudi Feast Food Festival 2025 Under Thai Commerce Minister Suphajee’s Lead
Saudi Arabia Sharpens Its Strategic Vision as Economic Transformation Enters New Phase
Saudi Arabia Projects $44 Billion Budget Shortfall in 2026 as Economy Rebalances
OPEC+ Unveils New Capacity-Based System to Anchor Future Oil Output Levels
Will Saudi Arabia End Up Bankrolling Israel’s Post-Ceasefire Order in Lebanon?
Saudi Arabia’s SAMAI Initiative Surpasses One-Million-Citizen Milestone in National AI Upskilling Drive
Saudi Arabia’s Specialty Coffee Market Set to Surge as Demand Soars and New Exhibition Drops in December
Saudi Arabia Moves to Open Two New Alcohol Stores for Foreigners Under Vision 2030 Reform
Saudi Arabia’s AI Ambitions Gain Momentum — but Water, Talent and Infrastructure Pose Major Hurdles
Tensions Surface in Trump-MBS Talks as Saudi Pushes Back on Israel Normalisation
Saudi Arabia Signals Major Maritime Crack-Down on Houthi Routes in Red Sea
Italy and Saudi Arabia Seal Over 20 Strategic Deals at Business Forum in Riyadh
COP30 Ends Without Fossil Fuel Phase-Out as US, Saudi Arabia and Russia Align in Obstruction Role
Saudi-Portuguese Economic Horizons Expand Through Strategic Business Council
DHL Commits $150 Million for Landmark Logistics Hub in Saudi Arabia
Saudi Aramco Weighs Disposals Amid $10 Billion-Plus Asset Sales Discussion
Trump Hosts Saudi Crown Prince for Major Defence and Investment Agreements
Families Accuse OpenAI of Enabling ‘AI-Driven Delusions’ After Multiple Suicides
Riyadh Metro Records Over One Hundred Million Journeys as Saudi Capital Accelerates Transit Era
Trump’s Grand Saudi Welcome Highlights U.S.–Riyadh Pivot as Israel Watches Warily
U.S. Set to Sell F-35 Jets to Saudi Arabia in Major Strategic Shift
Saudi Arabia Doubles Down on U.S. Partnership in Strategic Move
Saudi Arabia Charts Tech and Nuclear Leap Under Crown Prince’s U.S. Visit
Trump Elevates Saudi Arabia to Major Non-NATO Ally Amid Defense Deal
Trump Elevates Saudi Arabia to Major Non-NATO Ally as MBS Visit Yields Deepened Ties
Iran Appeals to Saudi Arabia to Mediate Restart of U.S. Nuclear Talks
×