Bank of America said recent data leads it to believe there is a 1-in-3 chance of a recession in the next year.
Bank of America said recent data leads the firm to believe there is a greater than 30% chance of a recession in the next year.Economist Ethan Harris said the "bright spot" of the economy is that initial jobless claims remain at low levels.
Traders and financial professionals work ahead of the closing bell on the floor of the New York Stock Exchange.Based on the most recent data, the bank's global economist now sees a greater than 30% chance of a recession in the next year. "Our official model has the probability of a recession over the next 12 months only pegged at about 20%, but our subjective call based on the slew of data and events leads us to believe it is closer to a 1-in-3 chance," said Bank of America global economist Ethan Harris in a note to clients Monday.
Uncertainty around the U.S.-China trade war and a global economic slowdown have caused interest rates to tumble and weighed on the major stock averages in recent weeks. Last month's jobs report showed a strong consumer, but business investment is low as investors and business owners juggle a new tariffs and fiscal policy uncertainty.For one, the yield on the 10-year Treasury yield dipped below the yield on the 3-month, inverting part of the yield curve.
Harris also said that three of five economic indicators that track business cycles: auto sales, industrial production and aggregate hours worked, are at levels reached right before previous recessions.—with reporting from CNBC's Michael Bloom.
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