Torsten Slok’s VTRR (Voluntary Trade Reset Recession):
Source: Slok/Apollo.
Torsten appends a 90% probability to recession. This is a conditional forecast (the tariffs stay in place). When the store shelves are empty, that’s when the collapse begins in this scenario.
Betting markets place 49% on 2025H1 for a recession start, a bit earlier than Slok’s guess.
I thought it would be useful to show the range of survey responses on the question of GDP growth, and how they match with two forecasts, and several nowcasts.
Figure 1: GDP (bold black), GDPNow adjusted for gold imports, 4/24 (light blue square), GS, 4/24 (red triangle)), Wells Fargo, 4/25 (pink +), NY Fed, 4/25 (purple square), St. Louis Fed, 4/25 (red circle), IMF April WEO forecast (inverted blue triangle), Dynan/PIIE forecast of April 15th (teal), WSJ April survey mean (tan line), 20% trimmed low/high (gray lines), all in bn.Ch.2017$ SAAR. Source: BEA, Atlanta Fed, Goldman Sachs, Wells Fargo, NY Fed, St. Louis Fed, IMF (April WEO), PIIE, WSJ April survey, and author’s calculations.
The bottom WSJ forecast is Carlton Strong/JP Morgan.
I will say that all these forecasts predate the President’s new executive order requiring all truckers to pass a English literacy test. I would think this would accelerate the onset of shortages.
Trump admin (Bassent) signaling a complete capitulation on Trump tariffs – (Trump is making so many great deals! we need to take the tariffs off) – but at this point even a complete U-turn on tariffs or carve outs in select industry (autos) – is going to hit our Supply Chain like a whiplash – stagflation, maybe recession? (because of so much policy uncertainty – small/large businesses are going into survival mode. )
Besides all the tariff BS (US going back to 1900s! No income tax, no social safety) What I am starting to see are impacts from cutting 1 million federal workers and contractors – ask the flooded out farmers in eastern Arkansas about trying to get FEMA money.
Because services are so much more of a component of the economy these days, this month I’ve paid particular attention to the regional Feds’ *non*manufacturing reports. Here are their general business conditions numbers:
Empire State down -0.5 to -19.8
Philly up +1.3 to +6.9
Richmond down -16 to -30
Kansas City up +3 to +3
Dallas down -8.1 to -19.4
The average for service so far this month is -12, which is worse than at any point since the pandemic.
Manufacturing has also been contracting in these surveys, and contracted further in April.
This suggests that ISM non-manufacturing for April, when reported, will show contraction. If it does, then the “economically weighted” average of the two ISM surveys will be consistent with the onset of recession, at least starting in May.
Slok’s diagram is mechanistic. That’s not a criticism; an understanding of the mechanism is necessary, just not a complete picture. Anticipation of a well-announced external shock could trigger the paradox of thrift and pull recession forward.
Empty shelves will soon appear and wake up all those who don’t read/trust news.
“Why didn’t Amazon do this when the Biden administration hiked inflation to the highest level in 40 years?” Leavitt asked.
because Biden did not hike tariffs 145% you nitwit. seriously, is she that stooopid or simply willfully jaded? and why is the trump administration so upset about somebody simply stating transparently the cost of materials? really, are you so jaded that you need to censor everything? this controlling of the narrative is very autocratic in nature. hypocrites. why is the government in the business of hiding the truth?
“Betting markets place 49% on 2025H1 for a recession start, a bit earlier than Slok’s guess.”
simply a result of arbitrary time slots. use middle half of 2025 and you get identical recession start predictions.
this may become the biggest economic self goal the world has every seen. china does not seem interested in making a move until after damage has been inflicted on trump, even though both nations will sustain damage. china has called trumps bluff. the rest of us will suffer.
Hoo Boy… Forbes has run a commentary piece entitled “Medicare, Medicaid, And Social Security Are Under Attack”:
https://www.forbes.com/sites/eliamdur/2025/04/29/medicare-medicaid-and-social-security-are-under-attack/
Forbes, for heaven sake. And some Republicans in the Senate aren’t happy:
https://www.yahoo.com/news/republican-senators-pan-proposed-house-180820191.html
Josh Hawley, for heaven sake.
And this is where trump throws uncle elon under the bus. Trump will claim this is musk policy, not trump policy. He will quickly blame musk and claim to be saving entitlements.