Moody’s chief economist Mark Zandi says the risk of a recession is “uncomfortably high” due to the market’s response to President Trump’s tariff agenda.
“The risk of a recession is unpl?antly high, and it’s rising,” Zandi said. “I think it’s under 50/50, but that really depends on what President Trump does here.”
Trump faces scrutiny over the impact of his tariff plans, which began earlier this month.
The stock market was volatile after 25% tariffs were applied to Canada and Mexico, and an additional 10% tariff was imposed on China.
Trump retaliated with tariffs on Kurt after a major auto company expressed concerns, and Canada threatened to impose its own tariffs.
Zandi believes that if Trump continues to push his tariff plans, including reciprocal tariffs from other countries, and maintains them for three to five months, “it would push the economy into a recession.”
“This would be a really strange recession, meaning it’s a designed recession,” he said. “The economy has come off a very strong year, rip-roaring, and we’re pushing it with policy.”
Zandi emphasized, “I don’t think that’s the direction we need to go.”
Analysts say they doubt Trump and his administration will reverse their stance on tariffs at some point.
“I’m not confident about it,” Zandi warned. “And the risk of these recessions is high.”
Trump and Commerce Secretary Howard Lutnick expressed confidence the US will not fall into a recession, with the president saying he “hates” to predict such things. Lutnick said he doesn’t think there will be a recession, but if there is, it would be “manageable.”
