Name: Buckle Up For ‘Tough 2025’ Warns Moody’s Chief Economist: Markets Not Pricing In What’s Next
Uploaded: 2025-05-02T04:06:50+00:00
Duration: 1329 s

Speakers

Mark Zandi — Chief Economist, Moody's Analytics

David Lin — Founder & Host, The David Lin Report / ex-Anchor, Kitco News

Summary

Mark Zandi, Chief Economist at Moody's Analytics, warns that the odds of a global recession starting in 2025 are over 50%, driven by tariffs and the trade war. He expects a tough 2025, with equities falling another 10-15% if recession hits, corporate earnings flat to down, and a lower US dollar as Fed cuts and safe-haven doubts weigh. He remains bullish on Europe and Germany, sees tariff-exposed sectors and real estate under pressure, and suggests crypto could get a bid if capital flight accelerates.

Mark Zandi sees over 50% odds of a global recession beginning in 2025.
Tariffs and trade tensions are pressuring confidence, supply chains, earnings, and demand.
He expects another 10-15% equity decline if recession materializes; market not pricing downturn.
Dollar direction is lower due to US weakness, likely Fed cuts, and diminished safe-haven appeal.
Europe and Germany are preferred longs on fiscal support and crisis-driven integration.
Manufacturing, transportation, agriculture, and consumer discretionary are seen hit first.
Residential and commercial real estate face flat-to-declining prices.
Gold and crypto are discussed; gold lacks a strong view, crypto may bid on capital flight.

Ideas

Mark Zandi Chief Economist, Moody's Analytics 0:05

Market not pricing recession downside risk

Mark Zandi sees over 50% odds of a global recession starting this year, driven by tariffs and the trade war. He argues the equity market is only pricing a sideways economy, not a downturn. If recession occurs, he expects another 10-15% leg down in stocks, with total drawdown of 20-30% from the peak; earnings are at best flat and more likely down due weaker margins and sales. If no recession, he sees the market near fair value and going nowhere quickly.

Mark Zandi Chief Economist, Moody's Analytics 3:57

Tariff-exposed sectors face early downturn

Mark Zandi expects tariff- and trade-war-exposed sectors to weaken first. Manufacturing, transportation/distribution, and agriculture are on the front lines, with supply chains already disrupted and US-China trade at a standstill. Discretionary consumer sectors such as leisure, hospitality, recreation, entertainment, and restaurants should feel the brunt soon as tariffs act as a tax on consumers.

Mark Zandi Chief Economist, Moody's Analytics 12:32

Dollar trend is lower on weak US

Mark Zandi says the dollar's direction of travel is lower. US economic weakness and likely Fed rate cuts later in the year argue for a weaker dollar, while global investors are questioning the US safe-haven status after tariffs. He notes the unusual divergence of rising Treasury yields alongside a falling dollar, and that the dollar has weakened against most currencies except the Chinese currency.

Mark Zandi Chief Economist, Moody's Analytics 16:50

Europe is best global equity market

If he were bullish on one place in the world, Mark Zandi says it would be Europe. He sees Europe responding to US and Russia/Ukraine pressures, Germany relaxing its debt brake to use fiscal space for defense and technology, and crisis conditions pushing Europe toward a stronger union, similar to the 2011-13 debt crisis. He expects Europe to outperform the US and potentially do okay in absolute terms.

Mark Zandi Chief Economist, Moody's Analytics 17:20

German fiscal pivot supports economy and markets

Mark Zandi highlights Germany's fiscal pivot: it relaxed its debt brake, allowing it to use fiscal space to support the economy and invest in defense and technology. This is a key reason he is constructive on Europe and gives Germany a distinct policy-driven edge.

Mark Zandi Chief Economist, Moody's Analytics 19:08

Housing faces flat-to-declining prices

Mark Zandi sees residential real estate under pressure. Mortgage rates near 7% are hurting demand, and while the lock-in effect cushions some sellers, he expects housing values at best flat nationwide, meaning declines in half the country's markets. Rising homeowners insurance costs are adding downward pressure in Florida, Texas, and parts of California.

Mark Zandi Chief Economist, Moody's Analytics 19:59

Commercial real estate faces further modest declines

Mark Zandi says commercial real estate has already corrected significantly, especially multifamily and office. He sees further weakness in industrial property due to reduced trade and transportation activity, another step down in office because of job losses, and only modest price declines broadly across CRE, with no price increases expected.

Buckle Up For ‘Tough 2025’ Warns Moody’s Chief Economist: Markets Not Pricing In What’s Next

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