Fact Check: There will be a recession in the United States in the year of 2025-2026

The Claim: "There will be a recession in the United States in the year of 2025-2026"

Introduction

The assertion that the United States will experience a recession in 2025-2026 has been circulating among economists and financial analysts. This claim is based on various economic forecasts and analyses that predict potential downturns in the economy during that period. However, the reliability of these predictions varies significantly, and the economic landscape can change rapidly based on numerous factors.

What We Know

1. CBO's Economic Projections: The Congressional Budget Office (CBO) provides economic forecasts that include projections for GDP growth and unemployment rates. Their report indicates that while there may be fluctuations in the economy, it does not explicitly predict a recession in 2025-2026, suggesting a stable growth trajectory instead 1.

2. University of Michigan's Economic Outlook: A report from the University of Michigan's Research Seminar in Quantitative Economics (RSQE) forecasts a ramp-up in economic growth in 2026, with an annualized growth rate of 2.5% by the end of that year. This report implies a positive economic outlook rather than a recession 2.

3. UCLA Anderson Forecast: According to the UCLA Anderson School of Management, as of early 2025, there are no signs indicating an imminent recession. The labor market remains strong, with low unemployment rates and job growth, suggesting a resilient economy 3.

4. Goldman Sachs Predictions: Goldman Sachs has recently raised the probability of a U.S. recession to 35%, citing concerns over economic conditions and potential Federal Reserve actions. This prediction reflects a cautious outlook but does not confirm a recession will occur 56.

5. J.P. Morgan's Assessment: J.P. Morgan's chief economist has indicated a 40% chance of a recession occurring, emphasizing risks related to governance and economic policies. This assessment highlights significant uncertainties in the economic environment 79.

Analysis

The predictions regarding a potential recession in 2025-2026 come from a mix of reputable sources, but they vary widely in their conclusions.

• CBO and University of Michigan Reports: Both the CBO and the University of Michigan provide forecasts based on comprehensive economic models and data. Their methodologies are generally reliable, as they are grounded in extensive research and historical data. However, they may not account for unforeseen events that could impact the economy, such as geopolitical tensions or natural disasters.

• Goldman Sachs and J.P. Morgan: These financial institutions are well-respected in the economic community, but their predictions can be influenced by market sentiments and investor behavior. Goldman Sachs' increase in recession probability reflects a shift in economic conditions but is still speculative. J.P. Morgan's assessment also underscores the inherent uncertainty in economic forecasting, especially when external factors are at play.

• Potential Biases: While the CBO and academic institutions like the University of Michigan strive for objectivity, financial institutions may have vested interests in their predictions, particularly if they align with their investment strategies or market positions. This could introduce bias into their assessments.

• Methodological Concerns: The methodologies used in these forecasts can vary significantly. For example, the CBO relies on legislative and policy frameworks, while financial institutions may focus more on market trends and investor behavior. Understanding these differences is crucial for interpreting their predictions accurately.

Conclusion

Verdict: Unverified

The claim that a recession will occur in the United States in 2025-2026 remains unverified due to the mixed evidence from various economic forecasts. While institutions like the CBO and the University of Michigan suggest a stable or growing economy, other sources, such as Goldman Sachs and J.P. Morgan, indicate a notable probability of recession, albeit without definitive predictions. This divergence in forecasts highlights the uncertainty inherent in economic predictions, which can be influenced by numerous unpredictable factors.

It is important to recognize that while some forecasts lean towards optimism, others reflect caution. The limitations of these predictions stem from their reliance on current data and methodologies, which may not fully account for future developments or external shocks to the economy. As such, readers should approach these claims with skepticism and remain aware of the fluid nature of economic conditions.

In light of this uncertainty, it is advisable for readers to critically evaluate information regarding economic forecasts and consider multiple perspectives before drawing conclusions about future economic conditions.

Sources

1. Congressional Budget Office. "CBO's Current View of the Economy From 2025 to 2027." CBO
2. University of Michigan. "The U.S. Economic Outlook for 2025-2026." U-M LSA
3. UCLA Anderson School of Management. "Recession Watch 2025." UCLA Anderson
4. Congressional Budget Office. "The Long-Term Budget Outlook: 2025 to 2055." CBO
5. Reuters. "Goldman raises odds of US recession to 35%." Reuters
6. NPR. "Goldman Sachs raises probability of a U.S. recession to 35%." NPR
7. Reuters. "J.P. Morgan economist sees 40% US recession chance." Reuters
8. BBC. "Is the US headed into a recession under Trump?" BBC
9. J.P. Morgan. "The probability of a recession now stands at 40%." J.P. Morgan
10. CNN. "Recession odds are rising as Trump's trade war escalates." CNN