forbes.com
Rising Recession Risk in the US: Negative GDPNow Forecast and Inverted Yield Curve
Several economic indicators, including the Atlanta Fed's negative Q1 2025 GDP growth projection, a re-inverted yield curve, and decreased consumer confidence, suggest a rising risk of US recession in 2025, although a 40% probability from Kalshi indicates it's still more likely to be avoided; upcoming jobs reports are crucial.
- What is the immediate economic impact of the combined signals (negative GDPNow forecast, inverted yield curve, and declining consumer confidence)?
- The Atlanta Fed's GDPNow model projects negative economic growth for Q1 2025, fueled partly by increased January imports. This, coupled with a re-inverted yield curve and falling consumer confidence, suggests heightened recession risk, although a 40% recession probability from Kalshi still indicates a higher likelihood of avoiding one.
- What are the potential future implications of rising unemployment on the current economic outlook and the accuracy of the various recession indicators?
- The upcoming employment reports from the Bureau of Labor Statistics in March, April, and May will be crucial. A rise in unemployment would significantly increase recession probability, while stable unemployment might indicate that current indicators are false alarms. The reliability of the yield curve as a recession predictor warrants further investigation given recent inconsistencies.
- How do differing economic models (Atlanta Fed's GDPNow vs. New York Fed's model) and the robustness of the yield curve as a recession predictor affect risk assessment?
- Multiple indicators point towards a potential US recession in 2025. The inverted yield curve, a historically reliable recession predictor, is accompanied by decreased consumer confidence and a negative GDPNow forecast. However, the relatively healthy job market currently mitigates these concerns.
Cognitive Concepts
Framing Bias
The article frames the narrative around the increasing risk of recession, leading with negative indicators and emphasizing the potential for economic downturn. The headline (not provided but implied by the text) and opening paragraphs would likely reinforce this negative framing. While acknowledging some counter-arguments, the emphasis remains on the warning signs, potentially alarming the reader.
Language Bias
The language used is generally neutral, using terms like "softening" and "declining growth" which avoid overly dramatic or alarmist wording. However, phrases such as 'economic warnings' and 'flashing economic warnings' contribute to a sense of urgency and potential alarm. While not overtly biased, the cumulative effect of the negative indicators presented does lean toward pessimism.
Bias by Omission
The analysis focuses heavily on indicators suggesting a potential recession but gives less attention to counterarguments or positive economic indicators. While acknowledging the New York Fed's model showing healthy growth, it doesn't delve into the reasons for the discrepancy or explore the model's limitations. The piece also omits discussion of government policies or other factors that might mitigate recessionary pressures. The omission of alternative perspectives could lead to a biased interpretation.
False Dichotomy
The article presents a somewhat false dichotomy by framing the situation as either a recession or no recession, neglecting the possibility of a mild slowdown or other economic scenarios. The discussion of the 40% probability from prediction markets implies that a recession is 'most likely avoided' when in fact a 40% chance is still substantial and doesn't negate the risk.
Sustainable Development Goals
The article discusses several indicators suggesting a potential recession in the U.S. economy, which would negatively impact decent work and economic growth. A recession typically leads to job losses, reduced economic output, and slower income growth, thus hindering progress towards SDG 8 (Decent Work and Economic Growth). The mentioned decline in consumer confidence and potential rise in unemployment directly affect employment and economic activity.