Barclays, BofA flag risk of US recession

The US economy faces a higher risk of slipping into a recession this year if President Donald Trump’s sweeping new levies remain in place, Barclays and BofA Global Research said on Thursday.

Trump on Wednesday imposed a 10% baseline tariff on all imports to the US and higher duties on dozens of other countries.

“If the tariffs stay in place, we think they would add 1-1.5 percentage points to inflation in the near term and subtract a similar amount from GDP, pushing the economy to the precipice of recession,” BofA economists led by Claudio Irigoyen said.

Barclays flagged a “high risk” of the world’s largest economy entering a recession. On a quarterly basis, the brokerage expects the US economy to contract 0.1% by the end of 2025.

Still, Barclays reiterated its forecast of two 25 basis point rate cuts by the US Federal Reserve this year, while BofA stuck to its stance of no rate cuts.

However, in a recessionary backdrop, BofA projected the US central bank could likely cut rates by 200 basis points or more.

Reuters