ChatGPT has assigned a 25% probability that the United States will enter a recession within the next six months.
The OpenAI model noted that while recession risks remain present, an economic slowdown is not currently the most likely outcome for the U.S. economy.
The assessment comes as investors and economists continue to debate the U.S. economic outlook amid mixed signals from employment, consumer spending, inflation, and interest rates.
Under ChatGPT’s baseline scenario, the economy avoids a recession and continues expanding at a slower pace through early 2027.
The estimate suggests recession risks remain elevated relative to normal economic conditions but are still below levels typically associated with an imminent downturn.
Based on current economic conditions, ChatGPT assigned a 55% probability that the U.S. economy avoids recession and continues growing at a slower pace.
The model also sees a 20% chance of a soft landing and stronger growth, a 20% probability of a mild recession, and a 5% likelihood of a moderate or severe downturn.
The AI model noted that recession risks could increase if unemployment rises above 4.5%, payroll growth weakens, retail sales deteriorate, corporate defaults climb, or energy prices remain elevated.
Conversely, recession odds could fall toward the 15% to 20% range if consumer spending stabilizes, inflation continues to ease, and the labor market remains resilient.
U.S. job market resilience
The strongest argument against a recession is the resilience of the U.S. labor market. Notably, the economy added 162,000 jobs in August, while the unemployment rate held steady at 4.1%. Historically, recessions are often preceded by a sharp deterioration in employment conditions, a trend that has yet to emerge.
Meanwhile, several major institutions have also lowered their recession forecasts in recent months. JPMorgan currently places recession odds at 40%, while Goldman Sachs has reduced its 12-month recession probability to 15%. RSM US has also cut its recession estimate to 30%.
Manufacturing activity remains in expansion territory, further supporting the view that the economy is slowing rather than contracting.
Despite the strong employment data, several indicators suggest recession risks cannot be dismissed.
At the same time, consumer finances have shown signs of strain, with elevated credit card balances, declining savings rates, and softer consumer sentiment amid inflation concerns.
Higher borrowing costs remain another challenge, as expectations for prolonged elevated interest rates could weigh on consumer spending and business investment.
Meanwhile, rising oil and gasoline prices risk putting further pressure on household budgets, while higher Treasury yields have increased refinancing costs for businesses, particularly highly leveraged borrowers.
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