Lingering pessimism: Recession risk still high after Trump pivot

All Street economists maintained their forecasts for a sharp slowdown in US economic growth and warned recession risk is still elevated despite the Trump administration’s decision this week to delay major tariffs on a wide range of trading partners.

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Morgan Stanley, BNP Paribas and RBC Capital Markets issued projections on Thursday for gross domestic product ranging from 0.1 per cent to 0.6 per cent growth in 2025, and 0.5 per cent to 1.5 per cent growth in 2026. They forecast the unemployment rate would climb to almost 5 per cent next year and pencilled in higher inflation in the coming quarters.

Sub-par growth

The lingering pessimism among economists contrasts somewhat with the signal from the stock market, which has rallied since President Donald Trump announced Wednesday that he was implementing a 90-day pause on previously announced “reciprocal” tariffs for countries other than China and raising the duty on Chinese imports to a whopping 145 per cent.

After the back-and-forth on Wednesday, the average US tariff rate remains roughly the same, hovering at the highest in over a century, and is nearly 24 percentage points higher than when Trump took office, ac-