Mark Zandi warns that the recession is approaching 50%, and the war with Iran could put us in economic trouble by the middle of the year | Good luck

Moody’s Analytics raised its recession outlook for the next 12 months to 48.6%, in line with Goldman Sachs, which now predicts a 30% risk of recession, and EY-Parthenon, which puts the chances of a recession at 40%. The underlying probability of a recession remains around 15% to 20%.

Before the US-Israeli attack on Iran at the end of March, economic indicators were already suggesting an unstable economic situation. A disappointing January jobs report showed the economy unexpectedly lost 92,000 jobs last month, defying forecasts of a 60,000 job gain and bleak hopes for a labor market recovery after the US added just 181,000 jobs in 2025. In addition, the unemployment rate is rising from three years ago, from 4%. reducing wage growth, especially for low-income Americans.

On top of those factors, the ongoing war in the Gulf has raised concerns among analysts of the oil crisis as the tipping point for the US recession, one economist has warned.

“Even before the crisis, I thought the recession and risks were increasing,” Mark Zandi, Moody’s chief economist, said. CNBC on Wednesday. “The risks of a recession are very high – unless the hostilities end now, the president finds a way to stand up, declare victory and move on, and the Iranians follow suit – I think a recession is more likely than the second half of the year.”

Why the Iran war is increasing the chances of a recession

Zandi warned earlier this week that if oil prices continue to rise, a recession is imminent. The cost of Brent crude has been rising around $97 per barrel, but reached a record low of $115 per barrel last week.

“Based on our global macroeconomic model simulations, oil prices will only need to be close to $125 a barrel in the second quarter of this year,” Zandi said in an X post on Monday. “While tensions are rising, that’s not the point.”

Although President Donald Trump postponed plans on Monday to strike Iran’s energy infrastructure and power plants (a move that added $1.7 trillion to the stock market and lowered the price of oil by $17), Iran rejected the American proposal to end the war on Wednesday, according to reports on state television, and the Pentagon reportedly ordered 2,000 paramilitary troops to be sent to the Middle East.

Today’s rising energy prices—including a $1 per gallon increase at the pump—have drawn comparisons to the oil crisis of the 1970s, when Arab OPEC members announced they would cut oil production and exports in retaliation for US support for Israel in the Yom Kippur War. President Richard Nixon subsequently advocated limiting the US oil supply to prevent prices from rising, but gas prices still rose by 40%.

The Paris-based intergovernmental organization, the International Energy Agency (IEA), has warned that the ongoing unrest in the Gulf is more than half a year ago. IEA Executive Director, Fatih Birol, said the world is losing 11 million barrels of oil today compared to 5 billion during the 1973 and 1979 crises.

“The depth of the problem has not been fully appreciated by decision makers around the world,” Birol told the National Press Club of Australia this week. “If you want to put it in perspective, this crisis is what it is now: two oil crises and one gas crisis combined,” he said.

There is also evidence that the continued closure of the Strait of Hormuz is affecting industries beyond energy. The Strait of Hormuz is the discovery of about a third of the world’s fertilizers. Smaller exports have already pushed up fertilizer prices, which threaten to affect US crops, and could eventually push up grocery prices.

“There is a very strong correlation between the movement of energy prices and the movement of food prices,” Ricky Volpe, an agricultural economist and agribusiness professor at Cal Poly, said. Good luck. “We’ve seen oil above $100 a liter before and that coincided with a sharp rise in food prices.”