A US recession is now expected in the first half of 2025, setting the stage for the most significant economic disruption since the global financial crisis of 2008.

This is the stark warning from the CEO of global financial advisory and asset management organization, deVere Group, as mounting pressures across key economic indicators are converging, making this downturn increasingly inevitable.

Investors need to prepare now, as the fallout will create both winners and losers across global markets.

“The cracks in the US economy are deepening. Trump’s on-off and erratic tariff policies have introduced heightened uncertainty for businesses and investors alike. The damage has already been done. Market waves of uncertainty have taken their toll, investor confidence has been battered, and businesses are scrambling to mitigate costs they never asked for. Global trade flows are adapting to a world with the US becoming no longer the dominant, reliable player it once was.

“Also, growth is stalling under the weight of still elevated interest rates, persistent inflationary strains, and mounting geopolitical uncertainties,” says Nigel Green.

“Consumer spending—the longtime bedrock of US economic resilience—is showing clear signs of fatigue.

“Retail sales data suggests households are prioritizing necessities over discretionary purchases, a classic precursor to economic contraction.

“Business investment, meanwhile, is cooling, with firms pulling back on expansion plans in anticipation of weaker demand.

“Corporate earnings reports already hint at squeezed margins, and labor market strength—once a reassuring factor—now appears more fragile than headline figures suggest.”

The Federal Reserve’s current federal funds rate stands at 4.25%–4.50%, as confirmed during its January 2025 meeting. While these rates were kept high to combat inflation, the economic strain is becoming increasingly evident.

Mortgage rates remain elevated, with the average 30-year fixed mortgage rate hovering around 6.65%, further dampening consumer and business sentiment.

“We expect the Fed is now likely to begin cutting rates to counteract a sharper downturn. But the effectiveness of such cuts remains uncertain, as recessionary pressures are already firmly in place,” notes the CEO of deVere.

For the global economy, the ramifications will be profound. The US remains the world’s largest economy, and as it falters, it will impact countries far beyond its borders.

Major trading partners, from Europe and Australia to Latin America to Asia, will face declining export demand.

Emerging markets, particularly those with high debt exposure, are especially vulnerable. Currency volatility will likely surge, making risk-sensitive assets even more unpredictable.

In the corporate world, recession fears are already shifting behavior. Hiring freezes and layoffs are gaining traction across multiple industries, from technology to financial services.

Private equity firms are pausing major acquisitions, wary of overpaying in an environment where valuations could sink.

Credit markets are tightening, and small businesses—more dependent on accessible financing—are feeling the strain first. As growth slows, defaults will rise, and market sentiment will shift accordingly.

Meanwhile, US equity markets are flashing warning signs. The Nasdaq and S&P 500 are now in correction territory, reinforcing fears that the downturn is accelerating.

Yet, even in crisis, opportunity emerges. “There are always winners and losers,” says Nigel Green.

“Defensive sectors, such as healthcare and consumer staples, are positioned to weather the storm better than most. Safe-haven assets, including gold and high-quality bonds, will likely see renewed investor interest.

“Investors with liquidity will have opportunities to buy quality assets at discounted prices as fear grips markets.

“The biggest question now is how deep and prolonged this recession could be. Policymakers will inevitably face pressure to respond, but their tools are limited.

“The Fed’s expected rate cuts may provide some relief, but they come at a time when inflation, though easing, still lingers.

“The effectiveness of monetary easing will depend on whether businesses and consumers regain confidence quickly enough to prevent a prolonged downturn.”

Nigel Green continues: “Investors can’t afford complacency. Now is the time to reassess portfolios, hedge against volatility, and take advantage of shifting market dynamics.

“Holding excess cash may not be the optimal move, as inflation still lingers, eroding purchasing power. Instead, strategic reallocation towards quality equities, defensive assets, and global diversification will be key to thriving in the turbulence ahead.”

He concludes: “We believe the countdown to a US recession has begun.”