US economic growth is currently facing headwinds from higher oil prices, increased tariffs, the resumption of student loan payments, and higher long-term interest rates associated with the fiscal situation.
When we quantify these four drags on growth, we conclude that they are insufficient to push the economy into a recession.
In other words, these shocks are milder than those of Covid-19 and the Lehman crisis, see chart below.
However, we are closely monitoring these four risks to assess whether they become significant enough to put GDP growth into negative territory later this year—for example, if oil prices, tariffs, or long rates increase further.
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