Moody’s: If oil prices remain high in the coming weeks, the probability of a US economic recession could exceed 50%
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Glonhui March 17|Moody's Analytics Chief Economist Mark Zandi stated that if oil prices remain high in the coming weeks, it will be difficult for the US economy to avoid falling into recession. He pointed out that as long as the Strait of Hormuz remains effectively closed to oil tanker traffic, the outlook for the US economy will continue to deteriorate. Before the outbreak of the Iran conflict, Moody's leading indicators built using machine learning models already showed a 49% probability of a US economic recession within the next 12 months. Zandi expects that the next time the data is released, the model will show a recession probability rising to 50% or higher. Zandi reminded that historical experience shows that surging oil prices are often a precursor to economic recessions. Since World War II, except for the brief recession triggered by the COVID-19 pandemic in 2020, every US economic recession has been preceded by a significant rise in oil prices.
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