Moody's Mark Zandi: Risk of recession was increases prior to war in Iran-now it's nearing 50%
Fortune • • business
Key Points:
- Moody’s Analytics increased its 12-month recession probability to 48.6%, aligning with Goldman Sachs and EY-Parthenon’s elevated recession risk forecasts, significantly above the baseline 15-20% probability.
- Economic indicators prior to the U.S.-Israeli attack on Iran already showed weakness, including a surprising loss of 92,000 jobs in February and a rising unemployment rate nearing 4.5%, alongside slowing wage growth for lower-income workers.
- The ongoing Gulf conflict has heightened fears of an oil shock, with Brent crude prices recently spiking to $115 per barrel, prompting warnings that sustained prices near $125 per barrel could trigger a recession by mid-year.
- Rising energy costs, including a $1 per gallon increase at the pump, have drawn parallels to the 1970s oil shock, with the International Energy Agency noting the current crisis involves greater oil supply losses than those historic events combined.
- The closure of the Strait of Hormuz is disrupting global fertilizer supplies, leading to higher prices that threaten U.S. agricultural production and may contribute to increased grocery costs.
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