Source: Fortune
Summary
Moody’s chief economist Mark Zandi warns that the recent military action in the Middle East has increased the odds of a recession, with the Moody’s economic indicator model placing the likelihood at 49% over the next 12 months. Zandi notes that weak labor market numbers and soft economic data have contributed to the increased risk. Other economists, such as those at Oxford Economics and Goldman Sachs, have lower recession odds, but still acknowledge the growing risk. The conflict has also led to a surge in oil prices, which could further impact the economy.
Our Reading
The numbers tell one story. Moody’s recession call is higher compared to many on Wall Street, with some economists predicting a lower likelihood of recession. Mark Zandi’s warning of a potential recession comes as oil prices surge due to the conflict in the Middle East. The strength of the subsequent recovery depends on how quickly shipping through the Strait of Hormuz is normalized. Economist Torsten Slok suggests that economic downturns are becoming less frequent, and instead, investors should prepare for sector-specific cycles. The announcement sounds familiar, as economists are wary of sharing forecasts that might spook consumers or investors.
Author: Evan Null
