The risk of the U.S. heading into a recession is building as Donald Trump’s multibillion-dollar war in Iran drags on.
The economy under Trump, who has an estimated net worth of more than $6 billion, was already recording dire jobs numbers and stagnating growth even before the president launched his conflict in the Middle East.
With the price of oil now topping $100 a barrel and no real end in sight for the Iran conflict, economists are raising the possibility that the U.S. could fall into an economic downturn.
Moody’s Analytics’ model has raised its recession outlook for the next 12 months to 48.6 percent, with Moody’s chief economist Mark Zandi warning that oil prices hitting $125 could be the tipping point. “With tensions still elevated, that’s not a stretch,” Zandi posted on X on Monday.
Goldman Sachs has also raised its U.S. recession probability within the next 12 months to 30 percent from 25 percent, while Wilmington Trust puts the odds at 45 percent. EY-Parthenon sees a 40 percent probability of a recession, but Chief Economist Gregory Daco warned those odds could “rapidly rise in the event of a more prolonged or severe Middle East conflict.”
In normal circumstances, the chance of the U.S. entering a recession in any 12-month period is around 20 percent.
Speaking to CNBC, Zandi said he is concerned that recession risks are “uncomfortably high and on the rise.”
“Recession is a real threat here,” Zandi added. “If oil prices stay kind of where they are through Memorial Day, certainly through the end of the second quarter, that’ll push us into recession.”
The worldwide oil crisis triggered by Trump’s war in Iran could ease if the Strait of Hormuz shipping route between Iran and Oman is reopened, though Iran appears unlikely to do so any time soon.
Trump is reported to have asked Iran to send a 15-point plan on how to end the war, which is believed to touch on subjects such as its ballistic missile and nuclear programs. However, Iran’s military is steadfastly refusing to come to any sort of deal with the U.S.
“Our first and last word has always been, is, and will be this: someone like us will never come to terms with someone like you. Not now, not ever,” a spokesperson for the Khatam al-Anbiya Central Headquarters, Iran’s military command, said in a video message on Wednesday.
“Do not call your defeat an agreement. The era of your promises has come to an end.”
The Daily Beast has contacted the White House for comment.
