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The respondents of the March Fed survey of March have increased the risk of recession at the highest level in six months, reduced their growth forecast by 2025 and raised their inflation perspective.
Much of the change seems derived from the concern for the tax policies of the Trump administration, especially tariffs, which are now seen by them as the main threat to the US economy, replacing inflation. The prospects for the S&P 500 decreased for the first time since September.
The 32 respondents, which include fund managers, strategists and analysts, increased the probability of recession to 36% from 23% in January. The January number had fallen to a minimum of three years and seemed to have reflected initial optimism after the president’s election Donald Trump. But as many consumer and commercial surveys, the probability of recession now shows a considerable concern about perspectives.
“We have had a lot of discussions with investors that are increasingly concerned that Trump’s agenda has left the rails due to commercial policy,” said Barry Knapp of the Ironsides macroeconomy. “Consequently, the economic risks of something more insidious than a soft patch are growing.”
“The degree of volatility of politics is not preceded,” said John Donaldson, director of fixed income at Haverford Trust.
The average GDP prognosis by 2025 decreased to 1.7% of 2.4%, an acute brand that ended consecutive increases in the three previous surveys that date back to September. It is forecast that the gross domestic product will recover 2.1% in 2026, in line with previous forecasts.
“The risks for consumer spending are biased down,” said Neil Dutta, head of Economic Research of Renaissance Macro Research. “Together with a frozen real estate market and less expense between state and local governments, there is a significant inconvenience in current 2025 GDP estimates.”
Food rate cutting perspective
The majority continues to believe that the Federal Reserve will reduce rates at least twice and will not increase rates, even if it faces persistently higher prices and weaker growth. Three quarters forecast two or more knitted cuts this year. Part of the reason is that two thirds believe that tariffs will result in unique price increases instead of a broader outbreak of inflation. But political uncertainty has created a widest range of opinions on the Fed of normal, since 19% believed that the Central Bank will not be reduced at all.
Even so, the highest rates and the weakest growth are a dilemma for Fed.
The president of the FED, Jerome Powell, “is really caught here due to the savey of the rate,” said Peter Bockvar, Bleakley Investment Director Financial Group. “If you care more about growth due to them and reduce rates as unemployment increases, but then Trump eliminates all rates, the weapon has jumped.”
More than 70% of respondents believe that tariffs are bad for inflation, jobs and growth. Thirty -four percent 34% say that tariffs will decrease the manufacture of the United States with 22% saying that they will not give rise to changes. Thirty -seven percent of respondents believe that tariffs will end up in greater manufacturing production. More than 70% believe that the efficiency effort of the Government Department to reduce government use is bad for growth and jobs, but will be modestly deflationary.
“A global commercial war, the casual goblin and government financing, deportations of aggressive immigrants and DC dysfunction threaten to boost what was an exceptional economy in the recession,” said Mark Zandi, chief economist of Moody’s Analytics.
