BCA Research projects a U.S. recession within three months, citing declining consumer savings (-$1 trillion) and rising commercial real estate delinquency rates (19%).
Opinion
The economic slowdown and financial instability suggest an inevitable recession, with Trump’s fiscal policies facing serious economic constraints.
Core Sell Point
The imminent U.S. recession could significantly elevate short-term investment risks, requiring a defensive market approach.
According to BCA Research, the U.S. economy is highly likely to enter a full-scale recession within the next three months. The firm had previously raised its 12-month U.S. recession probability from 65% to 75% following the November 2024 presidential election. Recent economic data further reinforces this outlook.
While NBER’s key recession indicators remained relatively stable in recent months, latest data suggests the U.S. economy has reached 'stall speed', signaling an imminent downturn. BCA warns that traditional economic models have underestimated the impact of U.S.-China trade tensions, Trump’s tariff policies, and the Federal Reserve’s rate cuts, meaning the growth slowdown could be more severe than expected.
One major risk is the rapid depletion of excess consumer savings, which had surged to $2 trillion post-pandemic but has now turned negative at -$1 trillion. This sharp decline could further weaken consumer spending. Additionally, delinquency rates in the commercial real estate market have surged to 19%, raising financial stability concerns. Given these deteriorating economic fundamentals, there is skepticism over Trump’s ability to implement large-scale stimulus or infrastructure spending, as excessive fiscal policies could worsen the severity of the recession.
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