Barclays Major Warning: 50-50 Chance of US Recession During Trump's Term!

Barclays senior US economist Jonathan Millar stated in a client report that the bank's models indicate "the underlying pace of US growth has slowed to a level that is vulnerable to a recession."

This is the highest probability of recession given by Wall Street since Trump canceled the initially announced "Independence Day tariffs." Moody's Analytics believes that the probability of a US recession next year (defined as two consecutive quarters of GDP decline) has climbed from 33.2% in March to 48.6%. JPMorgan Chase stated in its June outlook that the probability of a US recession in the second half of this year is 40%.

He referred to the fact that over the past three months, the US has added an average of only 35,000 jobs per month, just a fraction of the typical monthly growth of 161,000 jobs last year. The current unemployment rate is 4.2%, compared to 3.7% in January 2024.

This prediction is highly likely to trigger the president's anger. Two weeks ago, Trump lashed out at Goldman Sachs after the investment bank released a report warning that consumers would pay for tariff increases. In a Truth Social post, Trump said that the bank's boss, Solomon, should "get himself a new economist" or "focus on being a DJ," a well-known hobby of his.

Earlier this month, Trump also fired US Bureau of Labor Statistics (BLS) Commissioner Erika McEntarfer after the agency released data showing that job growth unexpectedly slowed significantly in July and sharply revised down the data for May and June. Trump claimed that the data was "manipulated" to make him look bad.

He also stated that the increased risk of recession has raised the possibility of an imminent Fed rate cut. Fed Chair Powell said last week that the risk of a sharp deterioration in the job market now outweighs the risk of tariff-induced inflation, opening the door for a rate cut in September.

Powell said: "The downside risks to employment are rising, and if these risks materialize, they could occur rapidly in the form of a significant increase in layoffs and a rise in unemployment. A change in the balance of risks may require an adjustment to our policy stance."

The Fed chair has been heavily criticized by Trump, who has repeatedly called him a "fool" and "Mr. Too Late" for failing to cut rates earlier.