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Recession fears are intensifying on Wall Street as multiple economic indicators point to a potential downturn. Goldman Sachs has increased its 12-month recession probability from 15% to 20%, while a Bank of America survey shows 55% of fund managers view a trade war-triggered global recession as the top market risk. Consumer pessimism is also rising, with recession expectations hitting a nine-month high according to the Conference Board’s Consumer Confidence Survey.
Prominent economist David Rosenberg predicts a recession could emerge as soon as July, highlighting four critical warning signs: First, household finances are struggling, with only 63% of Americans able to cover a $2,000 emergency expense—the lowest since 2015—while household debt has reached a record $18 trillion. Second, small and mid-cap stocks are in correction territory, with the iShares S&P Small-cap 600 Value ETF down 16% from its November peak. Third, major companies including Walmart, Target, and FedEx have reduced earnings guidance, with about 70% of reporting companies citing policy uncertainty and tariff concerns. Fourth, bond markets show widening credit spreads, reflecting increased default risk, with Moody’s estimating a 9.2% chance of U.S. firms defaulting by the end of 2024—the highest since the financial crisis.
