October 28th, 2025
Technically, the US economy is still expanding. However, the labor market is weakening which is increasing the probability of a recession. At the same time, inflation is sticky around 3% and rising, which increases the probability of an inflationary shock. In addition, there are early signs of a credit event, currently related to private credit. Finally, there are many events that could cause a liquidity shock, related to geopolitics, domestic policy and other. The AI bubble burst could be the trigger that forces the transition to the next framework.
Turning points are the riskiest periods, and the current situation is extremely uncertain, given the mixture of the AI bubble and stagflationary data. For more info on our outlook, subscribe to our newsletter.
