U.S. Recession is a ‘Serious Threat,’ Warns Moody’s

Moody’s Chief Economist Mark Zandi has cautioned that the risk of a recession poses a “serious threat” amid the U.S.-Iran war and surging oil and gas prices.

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Even before the start of the conflict, the Moody’s leading economic indicator model assigned the odds of a recession over the next 12 months of 48.6%. Zandi noted that he wouldn’t be surprised if the odds jump past 50%, adding that every recession since World War II, except for the pandemic recession, followed a spike in oil prices.

Oil Prices Rise as Recession Risks Build

Higher oil prices have a smaller impact on the economy than in the past, as the U.S. is now a net exporter of oil and can meet demand with domestic supply. However, consumers were already “nervous spenders” prior to the war, said Zandi.

Goldman Sachs puts the odds of a recession over the next year at 25%, citing a weak February jobs report and elevated oil prices. The report showed a loss of 92,000 nonfarm payrolls, well below the estimate of 50,000 additions, and a 4.4% unemployment rate.