Bank of America Pegs Recession Risk at 1 in 3

Chris Gaetano
Published Date:
Aug 12, 2019

Bank of America, observing turbulence around the trade war with China as well as general slowdowns in global growth, said that the chance of a recession within the next year is now at 1 in 3, according to CNBC. The bank's head of U.S. economics said that its official models show a 1 in 5 chance, but it adjusted its estimation based on recent events and data. This is due to several major indicators showing troubling signs: the inverted yield curve on U.S. Treasury bonds, as well as the statistics on auto sales, industrial production and aggregate hours worked that track with levels associated with an imminent recession. 

This prediction is roughly in line with the results of a recent poll of professional economists, which gave a 35 percent probability of a recession within the next 12 months. Meanwhile, analysts from both Morgan Stanley and Bank of America Merrill Lynch previously said that the 10 percent tariffs announced by the White House will slow global growth, but if they ever reach 25 percent, the global economy could see a recession within nine months.

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