Recession Risk Rises: Goldman Sachs, Moody’s, and Kalshi Signal Increased Economic Concerns

Mounting geopolitical tensions, particularly surrounding the conflict in Iran, coupled with weakening labor market data and fluctuating oil prices, are driving up recession probabilities for the U.S. Economy. Leading financial institutions like Goldman Sachs and Moody’s, along with prediction platforms like Kalshi, are all signaling a heightened risk of economic downturn.

Goldman Sachs Raises Recession Probability

Goldman Sachs has increased its 12-month U.S. Recession probability to 25%, a five-point jump from January. This revision is primarily attributed to a weaker-than-expected February jobs report, which showed a payroll decline of 92,000, and persistent softness in broader labor market trends. The firm’s estimate of underlying job creation is barely above zero, falling short of the approximately 70,000 jobs per month needed to maintain stable unemployment levels. Goldman Sachs projects the unemployment rate could reach 4.6% by the third quarter of the year.

Moody’s Analytics Warns of Increasing Recession Risk

Mark Zandi, chief economist of Moody’s Analytics, stated that a U.S. Recession is “increasingly hard to avoid.” Zandi attributes this assessment to weak labor market numbers and a broader slowdown in economic data. betting platform Kalshi currently estimates a 32.4% probability of a recession, while Polymarket places the chance at 31% before the end of 2026.

Impact of Geopolitical Tensions and Oil Prices

The escalating tensions with Iran are a significant contributing factor to the increased recession risk. Iran has threatened to target U.S. And Israeli financial institutions and economic interests in the region following an attack on an Iranian bank. This has led to volatility in oil markets, with Goldman Sachs forecasting Brent crude near $98 per barrel in March and April, potentially exceeding $100 per barrel in a worst-case scenario involving disruption to the Strait of Hormuz. Such a disruption could push headline inflation near 4%.

Mark Zandi’s Background

Mark Zandi, born in 1959, is a highly respected economist with a long track record of accurately predicting economic trends. As chief economist of Moody’s Analytics, he directs economic research and analyzes the impact of government policies and monetary policy. He is known for being one of the first economists to warn of the impending 2008 financial crisis. Zandi has testified before Congress on numerous occasions regarding the economic outlook and fiscal policy.

Key Takeaways

• Recession probabilities are rising, with Goldman Sachs placing the risk at 25% and Moody’s Analytics suggesting a recession is “hard to avoid.”
• Weakening labor market data, including a decline in February payrolls, is a key driver of these concerns.
• Geopolitical tensions, particularly surrounding Iran, are contributing to economic uncertainty and oil price volatility.
• Rising oil prices pose a threat to inflation and economic growth.