According to the New York Fed's recession model, there is a 29% probability that the U.S. will enter a recession by the end of 2025. This is a dramatic decline compared to the elevated probabilities seen during the Federal Reserve's aggressive monetary tightening in 2022 and 2023.
By November 2025, it is projected that there is a probability of 33.56 percent that the United States will fall into another economic recession. This reflects a significant decrease from the projection of the preceding month.
Most economists expect a US soft landing, with GDP growth slowing to around 2% in 2025 from 2.6% this year. Moody's forecasts global growth slowing to 2.7% in 2024 and 2.5% in 2025, from 3% in 2023.
The economy should expand at an upwardly revised pace of 2.7% year-over-year in 2024 (from 2.6%) and 2.0% in 2025 (from 1.7%). US real GDP growth in 2026 should settle at its potential rate of 1.8%. Inflation is expected to stabilize at the Fed's 2% target in Q4 2025, later than the original Q2 2025 estimate.
We expect moderating shelter inflation in 2024 as the lag in market rents pricing should catch up in the inflation readings. We forecast core PCE prices—the Fed's preferred inflation metric—to rise 2.4% in 2024, down from 3.4% in 2023.
Global recession outlook
There is now a 35% chance that the global economy will enter a recession by the end of 2024, and a 45% chance that it will do so by the end of 2025.
June 2024 Edition: Growth Stabilizing But at a Weak Pace
Despite an improvement in near-term prospects, the global outlook remains subdued by historical standards. In 2024-25, growth is set to underperform its 2010s average in nearly 60 percent of economies, comprising over 80 percent of the global population.
The index's January performance has historically been a strong predictor of performance for the remainder of the calendar year. The New York Fed's recession probability model suggests there is still a 29.4% chance of a U.S. recession sometime in the next 12 months.
But more simply, it's a sustained contraction in economic activity. Dwindling production and consumption as well as higher unemployment or lower prices are telltale signs the economy has made its way into recession territory. NBER usually declares a recession from 6 to 18 months after the recession's start.
In July 2024, the Sahm rule was triggered when the three-month moving average of the unemployment rate was 0.53 percentage points higher than its low since July 2023 (see Figure 1). Absent any decreases in the unemployment rate, the rule is likely to stay triggered for the next few months.
Recessions on average last for about 11 months, while a depression can last for several years. For example, the Great Depression of 1929 lasted for three and a half years. But the Great Recession of 2008 lasted about 18 months.
There have been 11 recessions since 1948, averaging about one recession every six years. 45 But periods of economic expansion are varied and have lasted as little as one year to as long as a decade.
First introduced in 2019, the Sahm Rule is a recession indicator based on conditions of the labor market. When the three-month average unemployment rate rises above its 12-month low by at least half a percentage point, we are in the early stages of a recession, according to the rule.
The world's largest economy is forecast to outperform economist expectations again next year, according to Goldman Sachs Research. “The US economy is in a good place,” writes David Mericle, chief US economist in Goldman Sachs Research.
Typically, in recessions, the demand for houses declines and as a result house prices will fall. This was the case in the last recession back in 2008 when the housing bubble burst and the recession began.
Lasting from December 2007 to June 2009, this economic downturn was the longest since World War II. The Great Recession began in December 2007 and ended in June 2009, which makes it the longest recession since World War II. Beyond its duration, the Great Recession was notably severe in several respects.
Seek Out Core Sector Stocks
If you want to insulate yourself during a recession partly with stocks, consider investing in the healthcare, utilities and consumer goods sectors. People are still going to spend money on medical care, household items, electricity and food, regardless of the state of the economy.
U.S. Economy Rides a Strong 2024 Finish Into New Year. Gross domestic product is expected to grow between 2% and 2.5% this year. WASHINGTON, D.C. — Economic growth withstood inflation, high interest rates and other challenges in 2024 and should continue to show strength in 2025.
We expect developed economies to experience a slight slowdown, with growth tapering from +1.8% in 2025 to +1.7% in 2026. In contrast, emerging economies are likely to sustain robust growth at +4.1% across both years. The US economy is forecasted to grow at +2.3% in 2025, slowing to +1.8% in 2026.
A 2024 recession is generally seen as unlikely, but metrics that economics take seriously hint that a recession could occur, perhaps in 2025.
In this context, we foresee real GDP growth decelerating modestly from 2.7% in 2024 to 2.1% in 2025 and 1.7% in 2026 — when tariffs pose a greater drag on the economy.
Rising Interest Rates
However, there is some minor concern that the lagged impact from elevated interest rates from 2024 could still bring about a recession. For example, the New York Federal Reserve's predictive model gives a 30% chance of a recession by December 2025.
Real gross domestic product (GDP) increased at an annual rate of 3.1 percent in the third quarter of 2024, according to the “third” estimate. In the second quarter, real GDP increased 3.0 percent.