It is too early to answer this question according to the C.D. Howe Institute Business Cycle Council. The two quarter drop in real GDP (2025 Q4 & 2026 Q1) was of "very low amplitude", and it is subject to revision. Also, less than half of the industrial sectors registered a decline of activity. Add to that the evolution of the job market, then the diagnostic of a recession is premature.
Report of June 5 by the Business Cycle Council
The world economy expanded again in February according to the J.P. Morgan Global Composite PMI data published March 5.
In short :
" Global Composite PMI Output Index at 53.3 (21-month high)
New export orders rise for first time in almost a year
Business optimism at five-month high"
Let's see what March will look like with the consequences of the war in the Middle East.
Link to the S&P Global press release of March 5 for more details
Forecasters surveyed quarterly by The Federal Reserve Bank of Philadelphia, expect a slowdown in US real GDP growth: 1.4% for 2025 and 1.6% for 2026 (median forecast). That compares respectively to 2.4% and 2.2% in the preceding quarterly survey. However, no decline is expected on a quarterly basis from 2025Q2 to 2026Q2.
... but at a slower pace than in the previous months, according to the most recent PMI results published March 5 by S&P Global. " Uncertainty hits demand and employment " " and the US is no longer outperforming the rest of the world. "
For details look at the March 5 press release on the J.P. Morgan Global Composite PMI
The Federal Reserve Bank of Philadelphia published February 14 the results of its most recent quarterly survey of 40 professional forecasters. On average, they estimate US real GDP growth at 2.4% in 2025 and 2.2% next year. That compares to 2.8% in 2024 and 2.9% in 2023, as calculated by the Bureau of Economic Analysis.
The forecasters predict that US real GDP should grow at an annual average of 2.1% over the next 10 years.
... of 2.7% in 2024, according to PMI survey results produced by S&P Global and published December 5. That would be less than the IMF economists forecast of 3.2% published last October.
According to IMF economists, `` ... growth is poised to weaken over the next five years and remain well below what was typical in the two decades before the pandemic. `` for most of G20 economies. Different policies are suggested in that text to support these economies.
According to the J.P.Morgan Global Composite PMI, the wold economy expanded faster in August than in July. The service sector was the growth engine, while manufacturing contracted again. « India saw the strongest growth overall, followed by the US. Rates of expansion were relatively mild in China and the euro area as a whole. »
The 34 forecasters, consulted quarterly by the Federal Reserve Bank of Philadelphia, predict that the US real GDP will grow 2.4% in 2024 (median forecast). Their previous estimate was at 1.7 %.
Link to the press release from the Federal Reserve Bank of Philadelphia
Flash PMI data from S&P Global show that economic activity continues to expand, in June, in the United States, thanks to the service sector, maunufacturing still showing signs of weakness. Business orders are still on the upside, meaning that July could still be expansionary.
But, the Conference Board Leading Economic Index "declined in each of the last fourteen months and continues to point to weaker economic activity". Conference Board economists forecast a contraction of the activity in the second half of this year and the first quarter of 2024.
Recession risks are still well present for the United States economy, according to the most recent data from The Conference Board, published March 17. Eight of the ten indicators of the Leading Economic Index gave a negative or flat contribution to that index last February.
In these days marked by inflation, two articles from The Economist allow us to learn from past episodes of accelerating prices. Also, a paper from IMF economists helps to understand wage-price evolution since the 1960s.
One article looks at the 1980s and retains three lessons: first, inflation can take a long time to come down; second, defeating inflation requires the participation not just of central bankers, but other policymakers too; third, it will come with huge trade-offs. (page 66 of the December 3rd edition)
The other analyses "The great inflation of the 1500s...", the "chaos" associated to it and that lasted many decennies. (pages 18 and 19 of the Holiday specials, December 24th edition). The conclusion: " No matter the cause, societies that let inflation set in should expect more than just their living standards to be debased." You can expect, inter alia, "...weaker states and a debt crisis."
Still on inflation, a working paper from IMF economists titled "Wage-Price Spirals: What is the Historical Evidence?" (WP/22/221) offers an interesting conclusion:
"Wage-price spirals, at least defined as a sustained acceleration of prices and wages, are hard to find in the recent historical record. Of the 79 episodes identified with accelerating prices and wages going back to the 1960s, only a minority of them saw further acceleration after eight quarters. Moreover, sustained wage-price acceleration is even harder to find when looking at episodes similar to today, where real wages have significantly fallen. In those cases, nominal wages tended to catch-up to inflation to partially recover real wage losses, and growth rates tended to stabilize at a higher level than before the initial acceleration happened. Wage growth rates were eventually consistent with inflation and labor market tightness observed. This mechanism did not appear to lead to persistent acceleration dynamics that can be characterized as a wage-price spiral.
It is still too early to say whether the recovery from the COVID-19 pandemic will play out like these past similar episodes. However, an important takeaway from the analysis is that an acceleration of nominal wages should not necessarily be seen as sign that a wage-price spiral is taking hold. Indeed, history suggests that nominal wages can accelerate while inflation recedes from high levels. In fact, on average, this has happened after similar macroeconomic episodes in the past."
World output and new business declined again, and at a faster rate, in November, according to the latest PMI data published December 5 by S&P Global. The good news: price pressures on input and output eased further.
The Desjardins Leading Index lets anticipate a significant slowdown in the pace of growth of the Quebec economy in the coming months. Last June, the economists of that financial institution foracasted a real GDP growth of 3.3% this year. Lets see the extent of the correction to their forecast in its coming update.
...remained solid in May, when the data on China are excluded, according to the PMI results published today.
The most recent survey of 34 professional forecasters, realised by the Federal Reserve Bank of Philadelphia, shows that the United States outlook is significantly weaker than it was three months ago.
The median projection for the United States real GDP growth is estimated at 2.5% for this year and 2.3% for 2023. Three months ago the projections were respectively 3.7% and 2.7%.
Link to the Second quarter 2022 Survey of Professional Forecasters
... "indicate that growth remains at above-trend levels but is moderating in the OECD area as a whole."
Preliminary data from IHS Markit show that in August " Private sector expansion slows sharply amid capacity constraints and Delta variant spread".
The Conference Board Leading Economic Index, published August 19, "...is consistent with strong economic growth in the second half of the year." The CB forecasts real GDP growth of 6% this year and 4% for 2022.
A panel of 36 forecasters surveyed by the Federal Reserve of Philadelphia "...expect real GDP to grow at an annual rate of 6.1 percent in 2021 and 4.4 percent in 2022." ( median forecast)
PMI surveys, compiled by IHS Markit, show that world economic activity accelerated last April "...to reach an 11 year high...".
The OECD monthly composite leading indicators "... point to a steady expansion in the OECD area and in most major economies..." in the coming months.
Uncertainties related to the evolution of the pandemy still taint any scenario about the short term economic outlook.
