Federal Reserve Chair Jerome Powell explicitly denied last week when asked whether stagflation posed a threat to the U.S. economy. However, as Wall Street economists have significantly raised their forecasts for a U.S. economic recession due to the war in Iran and potential high inflationary pressures, his successor may face even more challenging policy dilemmas in the future.
Economists Sharply Increase Recession Risk Assessments
In recent days, amid a notable rise in geopolitical risks and ongoing pressure on the U.S. labor market over the past year, economists have significantly increased their risk assessments of a potential U.S. economic contraction.
Moody’s Analytics has raised the probability of a U.S. recession within the next 12 months to 48.6%. Goldman Sachs increased its estimate to 30%, Wilmington Trust estimated it at 45%, while EY Parthenon projected 40%, with a specific…
