U.S. Macroeconomic Pulse. October 2019

Baseline revised down on weaker incoming data and rising global pessimism. Model-based recession projections suggest probability around 65% over the next 24-months. Mixed signals from labor market, as momentum continues to wane.

Key points

• Key points:
• Inflation returning to target, if downside risks moderate
• Fed likely to take a step back from its “mid-cycle” path to allow for time to evaluate the impact of increased accommodation
• Yield curve inversion easing with slight improvement in term premium
• Weaker demand pressuring oil prices, but geopolitical risks remain

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