UBS: Recession probability in the U.S. is 93% — a “historically worrying level”

Analysts from a Swiss investment bank, UBS, warn that the recession risk has elevated to 93% in the U.S. Their findings are based on May-July “hard data.” Interestingly, UBS emphasizes it doesn’t forecast a recession. Rather, it foresees the prolonged 70s-style stagflation in the near future. However, X is buzzing that the recession is already here, and experts just avoid calling it by that name.

The UBS analysis

The UBS analysis is based on objective figures. It doesn’t factor in survey-based and sentiment-driven data. Instead, the study is rooted in metrics like income of individuals, employment level, production and consumption figures, etc. The bank collected the data from the National Bureau of Economic Research. Market signals were not used for this study. 

UBS characterized recession risk levels as “elevated” and “historically worrying.” The bank stresses that metrics don’t display signs of quick collapse. Rather, it is a gradual sliding into a slow economy. The main reasons for alarm are the inverted yield curve going up sharply throughout 2025 and the growing pressure on credit markets. The credit data-based recession risk chances grew to 41% which is twice as high as in January.

Despite the fact that the data is showing a high risk of recession, the bank analysts believe that America is facing a different scenario. According to UBS, the U.S. economy will likely slide into “stagflation,” which is the mix of growing inflation and economic stagnation. 

The reasons for the pessimistic outlook include the low employment rate revealed in July. In August, the unemployment rate for most categories of Americans continued to grow. August added 22,000 jobs against 75,000 predicted. Earlier, JPMorgan experts “hinted” that the commercial use of AI could contribute to the growing number of layoffs. Improvement may follow in 2026.

What do other experts say?

UBS analysts are not the only ones to offer an alarming forecast for the U.S. economy in 2025. Based on the declining labor market, Moody’s chief economist Mark Zandi warns that the country is on the brink of a recession. According to him, the end of the year may be the moment of sliding into recession. Zandi’s colleague from Comerica Bank, Bill Adams, notes that slow growth is not a recession.

On Sep. 14, Zandi took to X to share the data showing the U.S. reached the pandemic-era lows for building permits. Zandi notes that dropping permits usually signals a recession. He said that in this situation, cutting interest rates is much needed.

The new CBO report is blaming Donald Trump’s tariffs, crackdown on immigration, and Big Beautiful Bill for the drop in economic growth in 2025. The report forecasts an increase in unemployment and inflation rates. More than that, the report warned about the imminent decline in consumer spending and the GDP drop. If the GDP declines for two quarters, the recession is confirmed.

Reactions

UBS notably tried to stress that such a high risk of a recession doesn’t mean that the U.S. economy is about to collapse. While the 93% figure looks like recession is inevitable, the factors that were not taken into consideration may help the U.S. stay on the brink of recession. It doesn’t mean the U.S. won’t have a tough time. Rather, it means that probably the American economy will have positive but extremely low growth rates.

However, the people all around the X are not buying UBS’s delicate approach to the recession probability. Here and there, they voice their conviction that the recession has already begun. 

Some of them even call the situation “an economic serfdom,” suggesting that the system is built to keep millennials and Gen Z being “renters for life.” People cite the growing prices and hesitation to buy a house as signs that things are really getting out of hand. Others cite UBS’s strong reputation as the reason to believe that the situation is really taking an ugly turn.

However, we hear about another recession at the gates way more often than we are witnessing it. It makes some people downplay UBS’s findings by saying that they hear that the recession is about to hit every year.