The Middle East conflict prolongs and raises the risk of a U.S. recession, with multiple international organizations collectively raising their warning probabilities.

What will happen if high oil prices persist until the end of the second quarter and trigger a recession?

Due to the ongoing conflict between the U.S., Israel, and Iran, global energy markets have become increasingly volatile, putting additional downward pressure on the U.S. economy. Recently, several international financial and consulting institutions have collectively updated their economic forecasts, raising the probability of a recession in the U.S. significantly above historical norms.

Based on geopolitical conflicts and oil price trends, multiple institutions have recalibrated the risk of a U.S. economic recession. Moody’s Analytics model estimates that the probability of the U.S. economy entering a recession in the next 12 months has risen to 48.6%; Goldman Sachs has also raised its prediction, increasing the recession probability to 30%; Wilmington Trust and EY-Parthenon estimate probabilities of 45% and 40%, respectively. Public data indicates that the typical level for such recession probability forecasts is around 20%, while current institutional warning levels are generally doubled or even higher, signaling a clear economic downturn.

Mark Zandi, chief economist at Moody’s Analytics, publicly stated regarding the current risk situation that the risk of a U.S. recession is “uncomfortably high and continues to rise,” with recession now a real threat facing the U.S. economy. Zandi clearly stated a key warning that if the current high oil price situation persists until late May or the end of the second quarter, the U.S. economy will enter a recession. This judgment has become the clearest risk threshold warning in this round of institutional alerts. (Xinhua Finance)