The U.S. economy faces an imminent downturn as surging oil prices tied to Middle East tensions threaten to push recession probabilities over 49%, according to Moody’s Analytics Chief Economist Mark Zandi.
Crossing The Critical Threshold
In a stark warning, Zandi declared that an economic contraction is once again a “serious threat.” According to his firm’s machine-learning leading economic indicator model, the probability of a downturn starting within the next 12 months already sat at an “uncomfortably high 49%” even before the latest geopolitical turmoil.
Now, with the Iran conflict triggering a rapid surge in global energy costs, Zandi anticipates conditions will deteriorate further. “It isn’t a stretch to expect the indicator to cross the key 50% threshold,” he stated.
Ultimately, he cautioned that “if oil prices remain elevated for much longer (weeks and not months), a recession will be difficult to avoid.”
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