New ‘Vicious Cycle Index’ Points to ‘Uncomfortably High’ Recession Risks
Summary
Moody's, a financial services company, has introduced a new tool called the "Vicious Cycle Index" (VCI) to measure U.S. recession risks. The index indicates a high chance of a recession in 2026, influenced by factors like job growth and the economic impact of increased oil prices due to conflict in Iran.Key Facts
- Moody's created the "Vicious Cycle Index" (VCI) to assess recession risks.
- The index uses unemployment and labor market participation rates.
- VCI suggests high chances of a U.S. recession in 2026.
- Recent job reports showed 178,000 jobs added in March, while February saw a loss of 133,000.
- The unemployment rate dropped to 4.3% in March.
- The labor force participation rate fell to 61.9% in March.
- The Iran conflict and rising oil prices contribute to potential economic challenges.
- The Federal Reserve's “Sahm Rule” tracks early signs of economic downturns.
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