Recession has, once again, become the buzzword across Wall Street after President Donald Trump recently declined to rule one out, saying that Americans should expect “a period of transition” across the economy.
Since his comments, Trump administration officials have offered varying answers when asked about the likelihood of a recession, with Commerce Secretary Howard Lutnick saying, “I would never bet on recession. No chance.” However, Treasury Secretary Scott Bessent said Tuesday, “I can’t guarantee anything.”
Investors will be keen to hear where Federal Reserve Chair Jerome Powell stands on the matter. However, he’s unlikely to veer away from his usual script if asked about the odds of a recession.
The only thing Powell tends to say with conviction is that the US economy is not currently in a recession, which he testified in a Senate hearing last month.
“Would you, as an American, trade places right now with Germany in terms of the economy?” Republican Sen. John Kennedy asked Powell on February 11. “No, I sure wouldn’t,” he responded, later adding that he wouldn’t want to trade places with China or France either.
Even though US economic conditions have changed significantly since Powell made those comments, which could very well lead him to believe that the risk of a recession has risen, he’ll likely never say so.
That’s because even the most subtle suggestion that the economy is inching closer to a downturn could spook investors and work against the Fed’s mission.
Rather, Powell may opt to repeat what he said two years prior: “There’s always a probability that there will be a recession in the next year.”
