The David Lin Report Buckle Up For ‘Tough 2025’ Warns Moody’s Chief Economist: Markets Not Pricing In What’s Next
May 2, 2025
Mark Zandi, Chief Economist at Moody's Analytics, shares his insights on the looming global recession expected in 2025. He discusses how trade tensions and tariffs could impact sectors, corporate earnings, and consumer demand. Zandi warns about overvaluation in equity markets and the potential fallout from economic corrections. He also explores the implications of a new income tax proposal as a response to rising costs. Finally, he addresses the surprising decline of the U.S. dollar and its effects on global investments.
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High Global Recession Probability
- The odds of a global recession starting in 2025 are over 50%, largely due to trade policy risks.
- If tariffs de-escalate, a downturn might be avoided, but delays deepen economic damage and increase recession likelihood.
Sectors Most Exposed to Tariffs
- Manufacturing, transportation, distribution, and agriculture will be first hit by the tariffs' economic impact.
- Discretionary consumer sectors like leisure and hospitality will also soon feel the trade war's effects.
Tariffs Weaken Corporate Earnings
- Tariffs act as taxes on both consumers and businesses, reducing sales and squeezing profit margins.
- Corporate earnings will likely be flat or decline due to weaker demand and higher input costs.