The U.S. will ‘absolutely’ have a recession in 2025 if high tariffs stay, Apollo’s Slok says
Torsten Slok, chief economist at Apollo Global Management, is certain the U.S. will fall into a recession this year if tariffs stay where they are. “It’s all conditioned on tariffs staying in place at these levels, and if they stay at these levels, we will absolutely have a recession in 2025,” Slok told CNBC’s ” Squawk on the Street ” on Monday. If the high tariffs that were put in place earlier this month remain in effect, odds of a two-quarter contraction in economic output stand at 90%, with gross domestic product dropping by 4 percentage points, according to the private equity firm’s economist. President Donald Trump on April 9 granted a 90-day reprieve for many tariffs, while hiking those on China to 145%. Central to Slok’s recession forecast are the China tariffs, which he contends are especially damaging for small businesses that are less likely to hold sufficient cash on hand to pay the higher tax on imported goods. “They basically do not have money and cash to pay 145% extra,” Slok said. “So, we will have bankruptcies of retailers of very significant magnitudes if this is allowed to continue.” Jobs, sentiment damage Any slump in retail would end up damaging the labor market and consumer sentiment, since small businesses with fewer than 500 workers make up 80% of total employment, according to Slok, who previously worked at Deutsche Bank and Bank of America after stints at the International Monetary Fund and the Organization for Economic Cooperation and Development. Particular attention should be paid to weekly jobless claims reports as job market weakness will show up there first. “The impact of tariffs, especially on China, is still weighing heavily, in particular, on small businesses,” Slok said. “And we have not seen that in jobless claims yet, but we should expect to see that.” Recession calls have grown on Wall Street in April, though the frequent tariff changes have made it nearly impossible for forecasters to measure the full impact. Earlier this month, JPMorgan Asset Management’s David Kelly, immediately following the April 2 announcement, said there’s a 60% chance of a recession, depending on whether high tariffs stay in place. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
