forbes.com
Betting Odds for US Recession Surge to 62% Amid Trump's Tariff Policies
Betting odds for a US recession in 2023 have risen to 62% due to the Trump administration's intensified tariff policies, causing market volatility and increasing concerns about inflation and reduced economic growth; Goldman Sachs and JPMorgan raised their recession probability estimates to 45% and 60%, respectively.
- What is the current probability of a US recession in 2023, and how have recent policy decisions contributed to this increase?
- Betting odds for a US recession in 2023 have surged to 62% as of Monday, fueled by the Trump administration's intensified tariff policies. This reflects a significant increase from 26% on Trump's inauguration day, according to Polymarket. Major economic institutions like Goldman Sachs and JPMorgan have also raised their recession probability estimates to 45% and 60%, respectively.
- What are the potential long-term economic consequences of the current trade policies, and what policy adjustments could mitigate these risks?
- The escalating trade war and its impact on market confidence highlight the potential for long-term economic consequences. Continued tariff escalation could trigger a deeper recession, while a strategic policy reversal might mitigate the risks. The situation underscores the importance of carefully calibrated economic policies to avoid significant negative impacts on global markets.
- How do the predictions of recession probabilities from betting markets and economic institutions compare, and what factors explain any discrepancies?
- The rising recession probabilities are directly linked to the Trump administration's tariff policies, which have caused significant market volatility and increased concerns about inflation and reduced economic growth. The Dow Jones, S&P, and Nasdaq experienced sharp declines following the recent tariff announcements, further fueling recession fears. UCLA economist Clement Bohr suggests that a recession is avoidable if these policies are moderated.
Cognitive Concepts
Framing Bias
The framing emphasizes the surge in recession betting odds and the negative market reactions, creating a sense of alarm and potentially overstating the likelihood of a recession. The headline and early focus on betting odds, before presenting economists' views, might unduly influence the reader's perception.
Language Bias
The language used is generally neutral, but phrases like "markets reeling" and "sent markets reeling" carry a negative connotation and might slightly exaggerate the severity of the situation. The repeated use of the term 'surge' also contributes to the sense of alarm.
Bias by Omission
The article focuses heavily on betting odds and market reactions to Trump's policies, but lacks substantial input from economists who may hold dissenting opinions or offer alternative perspectives on the recession probability. The piece also omits discussion of potential mitigating factors or economic indicators beyond the immediate market response to tariffs.
False Dichotomy
The article presents a somewhat false dichotomy by framing the recession probability solely through the lens of Trump's tariff policies. While the tariffs are a significant factor, it simplifies a complex economic situation by not sufficiently exploring other contributing factors or potential scenarios.
Sustainable Development Goals
The article highlights that Trump's economic policies, including tariffs, increased the risk of recession. Recessions disproportionately affect vulnerable populations, increasing unemployment and income inequality. Therefore, these policies negatively impact efforts to reduce inequality.