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US recession odds are becoming unsettlingly high
It’s only a matter of time before economists start slashing growth forecasts for the American economy.
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Judging from recent surveys, policy uncertainties have already dampened business and household confidence, clouding the economic outlook.
PHOTO: AFP
Mohamed A. El-Erian
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The notion of a US recession seemed remote just a few months ago, a mere blip on the radar of economic possibilities. More recently, however, that picture has started to change. A downturn, while still a risk scenario, is no longer unthinkable. A confluence of factors, from policy uncertainties to fragile financial markets, is casting a shadow over the world’s largest economy.
Several key financial indicators are already flashing yellow. The yield on 10-year Treasury bonds has fallen about 70 basis points in recent weeks, while oil prices have slipped below $70 (S$94) a barrel. These moves coincide with a string of disappointing economic data releases, reflecting growing apprehension about the immediate consequences of US President Donald Trump’s trade policies and public sector reforms.
