The UCLA Anderson Forecast has sounded an economic alarm by issuing a "recession watch" on Tuesday, citing potential substantial changes to the economy due to the policies of the Trump administration. The forecasters specifically highlighted the administration's tariff and immigration policies, indicating that their combined impact could lead to an economic contraction. This warning comes amidst a backdrop of increased recession probabilities as noted in recent surveys.
The Commerce Secretary expressed a controversial opinion, stating that a recession would be "worth it" for the gains expected to eventually result from the current policies. President Trump also acknowledged the possibility of economic turbulence, referring to it as a "period of transition."
Recent data from the CNBC Fed Survey for March revealed an increase in recession probability to 36% in the next year, up from 23% in the previous month. However, this figure remains below the 50% threshold observed during 2022 and 2023. Despite these statistics, most Wall Street forecasters do not consider a recession as their base case scenario. Nevertheless, concerns about an economic downturn have grown somewhat more pronounced.
The UCLA Anderson Forecast, which has been providing economic predictions since 1952, highlighted that businesses and consumers were largely unprepared for the scale and nature of the policies now being enacted. They noted that while there is no current evidence of a recession, it remains a distinct possibility.
"If these and their consequent feedback into the demand for goods and services occur simultaneously, they create a recipe for a recession." – UCLA Anderson Forecast
"Trump Policies, If Fully Enacted, Promise a Recession." – UCLA Anderson Forecast
The optimism surge following President Trump's election has diminished in some surveys, with businesses and consumers adjusting to the realities of new policy directions. It's important to note that official U.S. recessions are declared by the Business Cycle Dating Committee of the National Bureau of Economic Research.