UBS gives America a recession control and sees a probability of 93%recession, a “soggy” economy to come

The bank noted that from May to July, the “hard data” of the US economy showed a high level of risk, standing with a probability of 93% more recently. This is at “historically disturbing levels”, says UBS, given the history of this signal for identifying turns using data from the National Bureau of Economic Research.

The bank notes other conventional warning signs of an imminent recession from data, such as the reverse yield curve, which has noted at 23%, stable in recent months, but up in early 2025. Based on the construction stress on the credit markets, he notes that the probability of recession based on credit metrics is 41%, which has doubled since January.

FortuneThe 2025 reports have described the assembly warning signs that the United States is heading for a recession, echoing and widening on the results of the UBS research note. But when UBS zooms in hard data, he notes that if most of the measures become negative, it is more in a “discomfort” of “thousand inches”. None of the difficult data series shows “signs of rapid detangling”, according to the team led by Pierre Lafourcade, resulting in a global health assessment: “Sog, soft, weak, yes, but not to collapse”.

Key conclusions

The UBS analysis of “hard data” reflects the model owner factor of the bank, which is based on objective economic indicators and not based on the range such as personal income, consumption, industrial production and employment data. It filters feeling surveys, purchasing manager indices (PISS) and financial market signals.

After a brief recovery at the end of 2024, the signal of hard data decisively fell into a negative territory from February 2025. The lateral movement may be caused for a low-decreased weakness. According to the note, none of the main difficult economic series showed the type of acute and downward deviation (like more than one standard deviation below the trend) generally seen directly before past recessions.

The key message is that the American economy, by these hard data measures, is locked in an extended phase of slow stagnation or contraction, justifying prudence even if the collapse has not yet been materialized. This is aligned with the warnings of other analysts according to which, even if a recession does not materialize, the economy is heading towards a “stagflation” in style of the 1970s, a combination of a stagné economy and an increase in inflation. For similar reasons, UBS does not actually provide a recession despite this probability of 93% in difficult data.

Risk of overall recession

Despite the high risks, the UBS economic team does not officially predict a recession, but rather expects “soggy growth” followed by an improvement in 2026. The bank notes that its American economic team recently warned against “dropout speed” in the economy, in particular after the July report on the July jobs has revealed very weak growth in employment, and that the appeal seems to be ” 50-50 to 50-50.

UBS has made the average hard data with the reverse return curve and the credit markets to produce a probability of overall recession of 52% for July, up 15 percentage points since January and at levels historically associated with recessions designated by the NBER. The bank’s recession tracker therefore indicates a precarious balance for the American economy – a little lower than a soft landing, but not yet collapsing – leaving decision -makers and market observers on alert as 2025 progresses.

Other recession calls

Mark Zandi, chief economist of Moody’s Analytics, warned in early August that the United States was on the precipice of a recession, citing a large part of the same difficult data as UBS. Zandi argued that the main downward revisions in the July report recalled previous inflection points before recessions, when he sees as many more likely revisions due to oscillations in economic activity.

Zandi’s remarks have followed a similar warning from JPMorgan, who said that he “constantly stressed that a slide for the workforce of this magnitude is a recession alert signal … In episodes when the demand for labor slides with growth of growth, it is often a precursor of the litter.”

During the weeks that followed, Zandi expressed concerns in the coming winter 2025/2026 as the time for the greatest vulnerability, putting the chances of a recession at 50-50. In a few days, Zandi argued that states representing nearly a third of GDP were already in recession, in danger. According to his calculations, only a third of the economy developed at the end of August.

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