US slowdown to dodge recession

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Keep Calm: the US should dodge a recession in the next 12 months

Mindful of the sharp tightening of financial conditions since the publication of our 2019 Outlook1 , we have updated our probabilistic model of US recessions. Clearly, our outlook for the US economy, which was below consensus back in November, was a herald of subsequent market fears. Since the relationship between the recession risk and the market sell-off goes both ways (with our assessment of a causal, rather than casual, link between the UST yield curve inversion and economic recessions2 ), the question was whether market events had overtaken the economic outlook and threatened an even sharper slowdown in activity3 .