Barclays is warning that the U.S. economy remains on course for a recession, with the likelihood increasing as global trade tensions continue to simmer without resolution. In a note to clients, the bank said that persistent uncertainty around U.S. trade negotiations is weighing on business confidence and investment decisions, potentially tipping the economy into contraction.
- “The longer uncertainty persists without any concrete progress on deals, the higher recession risk is, in our view, and we haven’t seen full capitulation,” Barclays analysts wrote.
While the bank continues to view a mild recession as the most probable scenario, it noted that such an outcome is “still avoidable if the trade war de-escalates quickly enough to prevent it.”
Barclays also flagged concerns over equity valuations, suggesting that further upside in stock prices is becoming increasingly difficult to justify. The bank cited downgrades in corporate earnings forecasts and what it described as “erratic” Trump policy execution as key headwinds.
This article was written by Eamonn Sheridan at www.forexlive.com.