BlackRock CEO Larry Fink on Friday raised concerns over the possible negative growth of the US economy and a looming recession as the trade war escalates.
“I think we’re very close, if not in, a recession now,” Fink said in an interview with CNBC.
As US President Donald Trump announced reciprocal tariffs on April 2, fears of economic slowdown arose along with a sell-off in the stock market. On Wednesday, Trump declared a 90-day pause on tariffs, which will not help much to restore the US economy, according to Fink.
“I think you’re going to see, across the board, just a slowdown until there’s more certainty. And we now have a 90-day pause on the reciprocal tariffs — that means longer, more elevated uncertainty,” he said.
Larry Fink’s long-term outlook on US economy
According to Fink, the US economy is at risk in the short run, while he pinned hopes on artificial intelligence and advanced infrastructure to provide “transformative investment opportunities.” to enable economic growth in the long run.
Larry Fink on reciprocal tariffs
On Friday, Fink addressed the reciprocal tariff announcement on a call with analysts after the company reported first-quarter financial results.
“The sweeping US tariff announcements went beyond anything I could have imagined in my 49 years in finance,” the BlackRock CEO said.
Jamie Dimon’s warning on recession
Fink is not the first CEO to warn about the possibility of a recession. JPMorgan Chase & Co. CEO Jamie Dimon raised alarm over a looming recession, saying the odds of a recession in the US are at 50 per cent.
Previously, the JPMorgan Chase CEO also told Fox Business that a recession is a “likely outcome” of raising tariffs.
“I am going to defer to my economists at this point, but I think probably that’s (recession) a likely outcome,” he said.
Fed Chair Jerome Powell’s concern on slow growth and inflation
Last week, Federal Reserve Chair Jerome Powell highlighted that a trade war may lead to higher inflation and slower growth.
“We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation,” he said.
What do experts say about recession?
“We are rapidly headed towards recession,” Peter Tchir, head of macro strategies at Academy Securities told Bloomberg. “The world was prepared for ‘reciprocal tariffs.’ Whatever the abomination that was launched at the Rose Garden was, it is a disaster — mostly for the US, but also for the global economy,” Tchir added.
“If the 25% tariff is fully implemented quickly and largely maintained, and US trading partners retaliate approximately tit-for-tat, the U.S. and global economies will not suffer a depression, but they will suffer serious recessions,” Mark Zandi, Chief Economist at Moody’s Analytics wrote on X.
“The recession will hit imminently and extend until next year. Real GDP will fall close to 2% peak to trough, and unemployment will increase from its current 4% to 7.5% at its peak next year. I attach a 15% probability to this dark scenario,” Zandi added.
Donald Trump’s reciprocal tariffs
On April 2, Donald Trump unveiled steep reciprocal tariffs on several countries and later paused them for 90 days on Wednesday. After the tariffs were first announced, global markets witnessed a severe selloff, which was later recovered on the announcement of 90-day pause.
