The U.S. economy is being squeezed from two directions at once, and the pressure is showing in the forecasts. Moody's Analytics put the 12-month U.S. recession probability at 48.6% as of late March 2026 — the highest reading since the immediate post-pandemic period. Goldman Sachs is at 30%. Wilmington Trust, whose economists have historically been more conservative, has moved to 45%. None of these forecasters are outliers; they reflect a genuine deterioration in the near-term outlook driven by a pair of compounding shocks that have arrived simultaneously.
The first shock is oil. Brent crude peaked at $126 per barrel in early March — the first time prices have exceeded $100 since 2022, and the highest since the immediate post-Russia-invasion spike in 2022. The catalyst is the near-total closure of the Strait of Hormuz following the outbreak of U.S.-Israeli hostilities with Iran, which has reduced traffic through the world's most critical oil chokepoint by an estimated 95%. About 20% of the world's daily oil supply transits the Strait; when that flow stops, the price impact is immediate and global.
The second shock is trade. President Trump signed an executive order on March 23 imposing 25% tariffs on EU manufactured goods (10% on agricultural products), effective April 7. That adds to the existing tariff regimes on Chinese and Canadian goods. U.S. import prices rose 1.3% in February 2026 — the largest single-month gain in nearly four years, according to the Bureau of Labor Statistics. The Federal Reserve's preferred inflation measure, the PCE deflator, is running well above the 2% target and is expected to accelerate further once April tariffs flow through supply chains.
