According to Alec Kersman, managing director and head of Asia-Pacific at Pimco, the probability of a U.S. recession in 2025 has increased due to implemented tariffs. Speaking at CNBC’s CONVERGE LIVE event in Singapore, Kersman stated there is approximately a 35% chance of a recession this year, up from the 15% estimated in December 2024. Despite this, Pimco’s base case scenario projects U.S. economic growth at 1% to 1.5%, marking a significant decrease from earlier forecasts but still indicating expansion.
Kamal Bhatia, president and CEO of Principal Asset Management, suggested that increased domestic consumption due to trade policies might boost the U.S. economy more than expected. Trade wars could lead countries to become more insular, fostering patriotism that translates into higher local spending. Most people underestimate these effects, focusing instead on external impacts on GDP. Given that consumer spending accounts for about two-thirds of U.S. GDP, there is a high probability that tariff-induced increases in domestic expenditure will improve GDP performance.
These spending pattern changes occur as geopolitics increasingly influence economies and markets. Trump initially announced plans to double tariffs on Canadian steel and aluminum imports to 50% but later backtracked after discussions with Canadian officials.
— news from CNBC
