A US Recession Just Got a Little More Likely
A delayed Federal Reserve rate hike, turmoil in global equity markets ... and now increased expectations for a downturn in the United States.
The probability that the world's biggest economy will enter a recession in the next 12 months jumped to 15%, its highest level since October 2013, according to economists surveyed Oct. 2-7 by Bloomberg News. The median had held at 10% for 13 consecutive months.
Concerns over China, and the potential spillover to other economies, have led economists to cut their third-quarter growth forecasts to 2% from as high as 3% in July. China also is worrying Fed officials, who cited it as a risk to their outlook for economic growth and inflation — so much so that they delayed what would have been the first increase in the benchmark interest rate since 2006.
"Although U.S. economic data releases generally met market expectations, domestic financial conditions tightened modestly as concerns about prospects for global economic growth, centered on China, prompted an increase in financial market volatility and a deterioration in risk sentiment during the intermeeting period," Fed officials said in the minutes of their Sept. 16-17 gathering, released Oct. 8.
There is a bright spot, though: In a separate survey, economists projected the United States won't enter a recession until 2019, after pegging it to 2018 in last month's survey.
