US Economy Threatened by Recession, Mark Zandi: Trump Has One Week Maximum
The US economy is currently on the brink of a serious recession risk if peace negotiations with Iran do not yield results immediately. Moody’s Chief Economist, Mark Zandi, has warned that President Donald Trump has only about one week to secure a deal before the impacts of war drag the economy into a slump.
The situation intensified following reports on Monday (1/6) stating that Iran threatens to halt negotiations and blockade the Strait of Hormage until their primary demands are met. This news triggered a 7% surge in global crude oil prices (Brent and US) on Monday morning.
Zandi stated that a sustained surge in oil prices would have a significant impact on consumers and national economic stability. According to him, a peace agreement is the only way to cool oil prices, which are currently at a critical threshold.
“This must happen very quickly, in the next one, two, or three days, or at least next week,” Zandi said in an interview with Bloomberg. “Beyond that, I think we are facing a very real problem.”
Zandi highlighted several critical indicators threatening the US economy. In line with Zandi, energy research firm HFI Research noted that options and time for the Trump administration are dwindling. In its report, the firm warned that if the Strait of Hormuz remains closed until the end of June, global oil inventories will reach minimum operational levels.
Although analysis from the New York Fed at the end of April showed the probability of a recession in the next 12 months was still at 17%, the escalation of conflict in the Middle East and energy supply uncertainty could rapidly alter those projections. The world’s eyes are now focused on Washington’s diplomatic steps to avoid deeper economic shocks.
Meanwhile, Finance Minister Purbaya Yudhi Sadewa has requested that the public remain calm in responding to issues regarding potential economic recession. The Chief Economist of Bank Mandiri, Andry Asmoro, assessed that the risk of Indonesia experiencing a recession in the near future is very small, supported by domestic strength. However, the Head of the Centre for Macroeconomics and Finance (Indef), M. Rizal Taufiqurrahman, assessed that the government has failed to optimise fiscal space amidst the economic slowdown, increasing recession risks. Indonesia faces recession concerns due to worrying economic growth; in the first quarter of 2025, national economic growth was only 4.87%, the lowest since the third quarter of 2021.