Is the U.S. economy at risk of a recession? According to UBS, “hard data” from May to July signals a 93% chance of a recession. UBS’ proprietary factor model utilizes the hard data it used to set the odds and consists of non-survey-based metrics, such as employment, consumption, and industrial production.
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The model drifted into negative territory in February and has shown sideways movement since May, which “suggests sustained weakness rather than any new acceleration downward,” said Fortune.
UBS Sees “Soggy Growth” but Stops Short of a Recession Forecast
However, the bank’s economic team isn’t forecasting a recession and expects “soggy growth” from the economy before a recovery in 2026. So far, none of the hard data has decelerated in an alarming fashion, a move that has preceded previous recessions.
UBS combined its hard data with credit markets data and the inverted yield curve, which produced an aggregate recession probability of 52% in July, up from 37% in January. The numbers raise concern, but stocks aren’t letting up with the S&P 500 (SPX) up by 12% year-to-date.
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