Escalating Recession Fears as Wall Street Ups Probability
Mounting recession concerns are sweeping across Wall Street. This week, major financial institutions have significantly raised their probability forecasts due to ongoing geopolitical tensions and economic headwinds. Goldman Sachs has increased its 12-month recession probability to 30%, while Moody’s Analytics has raised its outlook to 48.6%, more than double the typical 20% baseline risk.
Mark Zandi, chief economist at Moody’s Analytics, voiced his concerns, “I’m worried that recession risks are uncomfortably high and rising. Recession is a real threat here.” These heightened concerns stem from multiple factors. The prolonged Iran conflict has pushed oil prices up by 35% in the past month, with gasoline reaching approximately $4 per gallon. Additional pressure comes from a labor market that created virtually no jobs in 2025 and an unemployment rate that climbed to 4.4% in February.
Consumer sentiment mirrors this anxiety. A NerdWallet survey shows 65% of respondents expect a recession in the next 12 months, a rise of 6 percentage points from February. Despite the elevated risks, economists maintain their baseline expectation that diplomatic solutions will emerge and the economy can avoid the worst-case scenario. However, the margin for error has narrowed considerably.
Source: CNBC