'Odds of a recession materializing' due to market factors

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Updated Jun 15, 2022
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ACT Research announced in its North American Commercial Vehicle Outlook report Monday that while a soft landing remains the U.S. economy’s most likely path in the months ahead, the potential for a mild recession is increasing.

“We find ourselves in a turbulent environment, where still significant positive and increasingly negative economic forces are crashing into one another. With inflationary shocks emanating from Ukraine, the Fed’s task of engineering a soft landing has become increasingly challenging,” says Kenny Vieth, ACT Research president and senior analyst. “We believe downward pressures are building, and the probability of recession continues to grow. We think the probability of a mild recession is now nearly as likely as that of our base-case scenario.”

Vieth says the current head of steam that includes healthy consumer and business balance sheets, strong employment demand, and pent-up manufacturing sector activity, this inflation driven economic slowdown is “on one hand somewhat unique. On the other, traditional recession predictors are in play: Fed rate hikes, high energy prices, negative exogenous events and falling equity valuations come to mind.”

He adds, “We believe the odds of a recession materializing, in some form or fashion, are essentially 50/50 relative to our slowing top-line growth into a modest freight recession base case.”

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