Overview
- A Wall Street Journal survey of 69 economists conducted in early July put the 12-month U.S. recession probability at 33%, down from 45% in April.
- The same survey projects headline CPI at about 3.04% for December 2025 and 2.58% for December 2026, signaling inflation staying above the Fed’s 2% goal over the next one to two years.
- The Federal Reserve held the federal funds rate at 3.50%–3.75% on June 17 and the FOMC’s projections show a median end-2026 rate near 3.8% with 17 of 18 officials expecting no cuts this year.
- Market pricing has moved sharply to discount a September 2026 cut, with the probability falling to roughly 3–4%, a shift that delays the liquidity boost investors had hoped would support risk assets like cryptocurrencies.
- Research from the New York Fed and recent energy and housing trends explain the higher inflation outlook because many firms are still passing tariff costs to consumers and oil and shelter pressures remain active, a dynamic that raises borrowing costs for households and keeps price relief distant.