CNBC Fed Survey: Tariffs Impact Economic Outlook, Recession Fears Rise

CNBC Fed Survey Findings

• 📊 Respondents to the CNBC Fed Survey have boosted their outlook for recession this year, lowered growth forecasts, and grown more worried about inflation.
• ⚠️ These changes appear largely linked to Administration policy and uncertainty, particularly concerning tariffs.

Federal Reserve Rate Expectations

• 🎯 While 100% of respondents expect no change in the FED funds rate at the current meeting, 77% anticipate two or more rate cuts this year.
• 📉 This expectation of cuts is part of the disagreement over how the FED will react to tariffs and the rising recession probability.

Recession Probability and Economic Growth

• 📈 The recession probability rose to 36% from 23%, reaching its highest level since September, though not at the elevated levels seen in late 2022 and 2023.
• 💡 The markdown in GDP forecast to 1.7% is the first decline since September, with growth expected to rebound to 2.1% next year.

Inflation Outlook and Tariff Impact

• 🚀 The inflation outlook shows CPI forecast to rise to 3% by year-end before dropping to 2.7% in 2026.
• 🧩 Two-thirds of respondents believe tariffs will pass through the economy as one-time price hikes rather than sparking broader inflation.
• ⚠️ However, 38% worry that tariffs could spark a lasting bout of inflation.

Market vs. Fed Rate Cut Timing

• 🧐 There's a view that the market and the FED may be too aggressive in timing rate cuts, with some believing cuts are further away than anticipated.
• 🔍 The FED will likely need to see the impact of tariffs on CPI and evidence of weakening in the job market or growth trajectory before initiating cuts.