‘Flashing yellow’: US facing 1 in 3 chance of recession within the year, says Bank of America.
Bank of America has warned the US economy has nearly a one-in-three chance of being plunged into a recession within the year
as the trade war with China heats up and interest rate tweaks fail to soothe a troubled market.
Discarding an “official model” predicting “only” a one-in-five chance of economic doom within the coming year,
Bank of America’s US economics head Michelle Meyer warned clients on Friday that the bank’s “subjective call based on the slew of data
and events leads us to believe it is closer to a 1-in-3 chance.”
The resurgence of the US-China trade war, whose latest victims – American farmers – have already been devastated by a growing season
plagued by flooding and droughts, and a “global economic slowdown” have set several economic indicators “flashing yellow,” Meyer said in a note to clients on Friday.
Auto sales, industrial production, and total hours worked – three of the five indicators the bank uses to track business cycles –
are at levels seen immediately prior to previous recessions.
Meanwhile, consumer prices surged 2.3 percent in the first six months of 2019, the fastest such rise in years - an increase retailers are blaming on the trade war.
With another round of 10 percent tariffs set to be imposed on $300 billion worth of Chinese goods next month, prices are sure to keep creeping up.
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