JULY 1, 2025 – The first half of the year is over. And what a 6 months it was!
Of course, most analysts are predicting a recession this year due to the tariffs. Do tariffs have anything to do with a recession? You know my answer – NO! What is the sole indicator to watch for a future recession – the stock market. Let’s look at some numbers to see what the future holds.
1st Quarter GDP was adjusted to -0.5%. 2nd Quarter GDP should come in around 3% (2.5%-4.0% seems to be the consensus). The average for the first half of the year should be around 1.3%.
As I mentioned in my last economy post, 1st Quarter GDP was artificially low by 2% due to extreme import trade. This will be reversed in the 2nd Quarter GDP. So, this cancels out and that is why the average of the first two quarters is the best indicator of GDP for the year-to-date.
For a recession to occur this year, the 3rd and 4th Quarters will need to have negative GDP readings. Based on the stock market (the Dow 30 is within about 1% of a new high, while most other indices have new all-time highs), the economy should be very strong as the year end. The March/April downturn does suggest a negative surprise will occur in September/October. But, the odds of two consecutive negative GDP quarterly readings is very low. Thus, an ‘official’ recession is unlikely at this point.
Shalom,
The Mann