Recession chances higher than markets expect, economist says

Economic Outlook - The likelihood of a recession is perceived to be higher than what markets currently anticipate, with signs of a significant economic slowdown evident [1] - There is an increase in defaults across various loan types, particularly in student loans, credit cards, and auto loans, indicating consumer financial stress [1] Consumer Impact - The recent bankruptcy of the seventh largest used car retailer highlights the pressure on consumers, which is expected to persist as tariffs are passed on to them [2] - This situation is described as a "perfect storm" that could potentially lead to a recession [2] Stock Market Dynamics - Despite economic concerns, the stock market is experiencing a strong performance, with a five-month winning streak and entering Q4, which is historically the best quarter [3] - There is a possibility that the stock market has decoupled from the economy, driven by excitement around AI spending, which could continue to support the S&P 500 [3][4] - However, there is also a risk that stocks may begin to anticipate a significant economic downturn, leading to a potential drawdown in Q4 [4]