Morgan Stanley: Risk of Recession Falls to 25 Percent Under Trump

Morgan Stanley predicts there is a 25 percent chance that a recession will occur over the coming year under President Donald Trump, down from 40 percent in a July 2006 prediction under Barack Obama.

 “A stronger global backdrop and the delayed promise of tax reform have lowered this assessment from 30% previously,” Ellen Zentner, a Morgan Stanley economist wrote in a note to clients, MarketWatch reported.

In July 2016, it had forecast a 40% chance of a recession.

The investment bank’s methodology incorporates “a blend of conditional and unconditional methods,” and indicates “a very low risk of recession beginning over the next six months.”

Morgan Stanley did flag some economic aspects worthy of investor caution.

“While difficult to measure in real time, an unemployment rate near its natural, longer-run rate suggests the economy is in the late phase of its business expansion, which naturally lends upward pressure to recession probabilities,”

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