UBS(US:UBS)2025-09-07 16:19Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the US economy and its recession probabilities, highlighting various economic indicators and their implications for future growth. Core Insights and Arguments 1. US Recession Probability: The probability of a US recession is currently at 93%, indicating a stable but elevated risk level since May 2025, with hard data showing weakness in July 2025 [2][3][19]. 2. Hard Data Trends: The hard data factor has remained in negative territory since February 2025, suggesting a contraction in the economic cycle. Despite a brief recovery at the end of the previous year, the current trend indicates a downturn [3][18]. 3. Yield Curve Analysis: As of July 2025, 23% of the US Treasury yield curve is inverted, which is stable since May but has increased by approximately 20 percentage points since January 2025. This inversion is a historical signal of potential recessions [4][20]. 4. Credit Stress Indicators: The recession probability based on credit metrics has risen to 41% by the end of Q2 2025, primarily due to declining interest coverage as net interest expenses increase [5][24]. 5. Aggregate Recession Probability: The combined recession probability across various indicators stands at 52%, stable since May but up 15 percentage points since January 2025. This reflects a broader economic slowdown despite some optimistic indicators at the end of 2024 [6][23]. Additional Important Insights 1. Economic Growth Outlook: The US Economics team does not forecast an immediate recession but anticipates "soggy growth" before a potential recovery in 2026. The term "Stall speed" was used to describe the current economic conditions, indicating limited room for further downside [6]. 2. Contributions to Economic Indicators: Most contributions to the hard data factor are negative but not severe, suggesting a weak economic environment without signs of imminent collapse [3][16]. 3. Employment Data: The upcoming employment situation report for August 2025 is expected to provide further insights into the labor market, which is a critical component of the economic outlook [2]. This summary encapsulates the key points discussed in the conference call, focusing on the economic indicators and their implications for the US economy.