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Recession Onset ETA 2025-09-09 to 2026-01-01

Recession Onset ETA 2025-09-09 to 2026-01-01

NOTE: The length can last longer than the estimated onset of the arrival (2025-09-09 to 2026-01-01).

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10-Year Treasury ( ) should be falling very soon for additional confirmation. Although, it did fall in 2024 two times shortly.

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A professor and former Department of Labor economist is issuing a recession warning.
- February 18, 2025

* Economist Warning Post Source: bsky.app/profile/jrothst.bsky.social/post/3liin7up3ck2z

* News Source: msn.com/en-us/money/economy/economist-warns-that-elon-musk-is-about-to-cause-a-deep-deep-recession/ar-AA1zrMEw

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* Source: [FOMC 2025-01-29 Meeting: federalreserve.gov/monetarypolicy/files/fomcminutes20250129.pdf

AI Analysis:
When is the next estimated recession?
Based solely on these January 2025 FOMC minutes, there is no estimated recession explicitly forecasted. The document suggests a slowdown in growth, but the base case scenario is continued expansion, not contraction.

Is it possible to occur within before 2026-01 or before 2027-01?
Yes, it is definitely possible. The minutes highlight significant downside risks that could materialize and lead to a recession. These risks, such as global economic weakness, geopolitical tensions, financial vulnerabilities, and persistent inflation, could certainly trigger an economic downturn within either of those timeframes.

In conclusion:
The January 2025 FOMC minutes do not estimate a recession as the central forecast. They anticipate slower growth and acknowledge significant downside risks that could lead to a recession. Therefore, while a recession before January 2026 or January 2027 is possible based on the risks discussed, it is not presented as the most likely outcome within these specific minutes.

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Cross-AI Analysis (two AI's comparing the summary):
The minutes reflect "cautious optimism" and that a recession within seven months is "not strongly signaled" but remains a "tail risk." This accurately reflects the overall tone of the minutes, which do not project a recession as the most likely scenario but acknowledge sufficient risks to warrant vigilance and a data-dependent approach.

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My Economic Analysis Summary & Rates Forecast:
* We may see a longer timeline of relatively flat rates (best-case-scenario).

Past Historical Example (2001 recession onset):
* From 1994-11 to 2001-02 we had relatively flat rates; mostly near 5.5% (above 4.6%).
(75 months)

Current Example & Forecasted Rates:
* From 2022-12 to 2025-12 we may continue to have relatively flat rates; mostly near 4% (above 4%).
(36 months)

"The Great Recession" (2007 recession onset) looks like the current rates trend as of 2025-02:
* From 2005-11 to 2008-01 we had relatively flat rates; mostly near 4.5% (above 4%).
(26 months)

Conclusion:
* Based on the historical pattern of flat interest rates preceding past recessions, particularly "The Great Recession" (2007 recession onset), the risk of a recession before the end of 2025 has likely increased. This analysis suggests vigilance is warranted and recession risks should not be dismissed. However, this pattern alone is not a definitive prediction, and a comprehensive recession assessment requires monitoring a wider range of economic indicators.?

AI Analysis of Conclusion:
Recession Probability by December 2025: 25–30% (elevated but not decisive).

AI Overall Assessment of your Conclusion and Probability Range:

Your conclusion is well-balanced, cautious, and analytically sound based on the information we have reviewed. The recession probability range of 25-30% by December 2025 is a defensible and reasonable estimate that effectively communicates the key findings of our analysis:

* Recession risk is not negligible.
* Recession risk is elevated due to historical patterns and EFFR behavior.
* Recession is not the most probable outcome at this point.
* Continued monitoring of a wider range of data is crucial.

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Major Economies:

* United States: The Federal Reserve has begun cutting rates.
* United Kingdom: The Bank of England has been cutting rates.
* Euro Area: The European Central Bank has been lowering rates.
* Canada: The Bank of Canada has been reducing rates.

Other Countries:

* Switzerland: The Swiss National Bank has cut rates.
* Singapore: The Monetary Authority of Singapore has recently lowered its interest rate.
* Mexico: Banco de México has been lowering its target interest rate.
* Indonesia: Bank Indonesia has also cut its interest rate.
* Sweden: Sweden has also begun cutting rates.
* China: People's Bank of China (PBOC) has also begun cutting rates.

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Recession Monitors:
(click to play)

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This Idea as an Image:

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URGENT: WARNING: reducing the deficit or risk a major debt crisis within three years"

“You’re getting closer. My guess would be three years, give or take a year, something like that.”
- Ray Dalio, the billionaire founder of hedge fund Bridgewater Associates

March 3, 2025
Source: bloomberg.com/news/articles/2025-03-03/dalio-warns-of-us-debt-crisis-heart-attack-within-three-years

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"Major and immediate action is needed to prevent America from going bankrupt"
-Elon Musk

"The last time a comprehensive review of the federal government was completed in 1984, the budget was $848 billion, national debt was $1.6 trillion & debt to GDP ratio was 38%. The budget is now $7 trillion, the national debt is $35.3 trillion & the debt to GDP ratio is 121.6%."
-DOGE
Jan 17, 2025
Source: x.com/elonmusk/status/1880285306353754575
Source: x.com/DOGE/status/1880282226727817715

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More Countries: Rate Cuts:
In addition to the list of countries above on the Feb 21 Note, also the following
* "India cut interest rates for the first time in five years, amid signs that the world’s fastest-growing economy is slowing down. Australia also cut rates while the US held steady."
Source: weforum.org/stories/2025/02/tariffs-dramatically-change-tenor-global-trade-and-other-economic-news-to-know/

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Trump launches ‘powerful military action’ against Houthis
The military operation against the Houthi militants could potentially influence oil prices, but the effect would depend on several factors:

Stability in the Region: If the military operation successfully stabilizes the region and ensures safe navigation through critical waterways like the Red Sea and the Suez Canal, it could lead to a decrease in oil prices. A stable environment typically encourages more oil shipments and can alleviate supply concerns.

Market Perception: Oil prices are heavily influenced by market perceptions. If traders believe that the military action will lead to a more secure shipping environment, it could result in lower prices. Conversely, if the operation escalates tensions or leads to further conflict, it could drive prices up.

Supply and Demand Dynamics: The overall supply and demand for oil also play a crucial role. If global demand remains high or if there are other supply disruptions elsewhere, prices may not decrease significantly, even with improved security in the region.

Geopolitical Reactions: The response from other regional players and the potential for retaliatory actions by the Houthis or their allies could also impact oil prices. Increased tensions could lead to higher prices due to fears of supply disruptions.

In summary, while the military operation could have the potential to lower oil prices by improving security and stability in key shipping routes, the actual outcome would depend on a complex interplay of factors, including market reactions and geopolitical developments.

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AI Analysis:
Today's meeting highlights that economic activity remains robust—with solid growth and a strong labor market—even as inflation is somewhat elevated. The Committee does acknowledge increased uncertainty and risks to its dual mandate, which means they are monitoring a range of indicators and are prepared to adjust policy if needed. However, there is no direct signal or forecast suggesting that a recession is expected within the timeframe of the next 7 months. The emphasis is on maintaining a balanced approach in light of evolving economic conditions. (longer-flatter rates for now)

Before December 2025

Short-Term Outlook:
Current indicators show steady growth with low unemployment. Most models and expert opinions would likely assign a relatively low probability of a recession in the near term—perhaps in the range of 10–20%.
Context:
This estimate reflects the fact that the economy appears to be expanding, despite inflation being somewhat elevated. The Fed’s cautious approach in maintaining current rates further suggests they see no immediate threat of a downturn.

By December 2027

Longer-Term Outlook:
As we look further ahead, uncertainties increase. Factors such as the cumulative effects of monetary tightening, evolving global economic conditions, and potential shifts in financial markets could raise the risk. In this scenario, some analyses might suggest a moderately higher chance—perhaps in the 30–40% range—of a recession occurring by the end of 2027.
Context:
These figures are very rough and would depend significantly on future economic data and policy decisions. The Fed has signaled that they are prepared to adjust policy if risks emerge, which means the longer-term outlook could change as new information comes in.

Important Caveats

Uncertainty:
Both estimates are speculative. Economic forecasting involves many moving parts, and unexpected shocks or policy shifts could rapidly alter these probabilities.
Model Variability:
Different forecasting models can produce varying estimates. The ranges provided here are meant to illustrate general risk levels rather than precise forecasts.

In summary, while the chance of a recession before December 2025 seems low given current conditions, the risk by December 2027 could be moderately higher—but both estimates come with significant uncertainty.

AI Analysis URL: federalreserve.gov/monetarypolicy/files/monetary20250319a1.pdf

Note

The projections don't point directly to an imminent recession. The median forecasts show modest GDP growth—around 1.7%–1.8% for 2025 through 2027—and low unemployment, suggesting that while growth may be slower than in previous booms, a contraction isn’t the central expectation. However, the projections do reveal considerable uncertainty and downside risks; if conditions were to worsen relative to the median, economic weakness could emerge.

In addition to these indicators, the projections include a forecast for the federal funds rate. The December projections indicate that the median federal funds rate is expected to be about 3.9% in 2025, gradually declining to around 3.4% in 2026 and 3.1% in 2027, with a longer-run target of approximately 3.0%. This gradual easing in the funds rate suggests that monetary policymakers are preparing for a slower economic pace without signaling a sharp downturn.

AI Analysis URL: federalreserve.gov/monetarypolicy/files/fomcprojtabl20250319.pdf

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For release at 2:00 p.m., EDT, March 19, 2025
Reference: Figure 2. FOMC participants’ assessments of appropriate monetary policy: Midpoint of target range or target level for the federal funds rate:

Reference: Page 4 of URL: federalreserve.gov/monetarypolicy/files/fomcprojtabl20250319.pdf

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