TheChek News Flow

Don your shimmering suit and kick up your heels, it’s time to celebrate America’s New Golden Age—or so says President Donald Trump. What could possibly go wrong? Well, not to take away your punch bowl prematurely, but a recession, for one thing.

What? The “R” word? Pshaw! No one’s made mention of that dreary economic relic in eons—or at least since November. Recessions, so the starry-eyed say, belong to a bygone era, not this epoch of cheap energy, unbridled growth, and AI-hegemonical American exceptionalism. (Ah, maybe let’s hold off on that last one.)

Snarkiness aside, my point is that just when rose-colored glasses are tinting the world most vividly is when all can come undone. In fact, at this moment of great economic expectations—and yes, much of it, as per usual in the U.S. of A., is warranted—there are still all manner of nagging worries, any one of which could explode into fury.

Consider sentiment itself. You may be aware that few, nay, basically no economists are predicting a recession right now. That’s in sharp contrast to just 24 months ago, when any dismal scientist worth her or his slide rule was calling for a contraction.

In fact, the average probability that a recession will occur within the next 12 months, according to 70 or so economists polled by The Wall Street Journal’s Economic Forecasting Survey, has been declining for the past 10 quarters, from a 63% chance in the third quarter of 2022 to just 22% today. This move is even more significant when you consider that rarely do economists rate the possibility of a recession at more than 90% or less than 10%.

Other analyses mirror the Journal’s. Bankrate, in its latest quarterly Economic Indicator Survey, reports that “economists put the odds of a recession by the end of 2025 at just 26%, a new series low [going back to the first quarter of 2022].” And some 91% of respondents to the latest National Association of Business Economics survey from a week ago assigned a probability of 50% or less to the U.S. entering a recession over the next 12 months.

So yes, the same cohort that is issuing the all-clear sign today was braying oh so recently, quarter after quarter, that a contraction was nigh—which struck some of us been-around-the-blockers as suspect. In June 2022, I wrote, “I’ve covered the markets and the economy for four decades, and I can’t recall a time when more people—or at least prognosticators, economists, and bankers—were more certain that an economic downturn was imminent….Does it mean that a recession won’t occur?”

In fact, it didn’t.

In June 2023, I revisited the topic and said flat out that there would be no recession that year. I was “ridiculing the most widely predicted economic event in modern history—which seems pretty certain not to happen.”

In fact, it didn’t.

Now the script has been flipped.

The fact that so many economists were wrong before doesn’t necessarily mean they are wrong again and that a recession is imminent. So, let’s examine some real-life proximate risks and check in with the few wild-duck economists who aren’t irrationally exuberantly inclined.

Amy Crews Cutts, for one, an independent consulting economist with Primerica. Invoking former Defense Secretary Donald Rumsfeld’s ”unknown and known knowns,” she sees a greater than 50% chance of a recession in the next 12 months.

“There’s always unknown risks,” she says, “say, if North Korea were to bomb Russia. But we have known risks, and chief among them is Trump’s trade policy. If he enacts tariffs rapidly, across large swaths of our import economy, we will see people involved in [international] trade being laid off and companies going belly up instantaneously.”

“I think that the Trump administration is using tariffs as a negotiating tool, and they’re not going to be as bad as many think, but there is a risk of overdoing it,” says Eugenio Alemán, an economist at Raymond James who, while positive on the U.S. economy, sees a 40% risk of recession this year, one of the highest in the WSJ survey. Alemán notes that we could slip into an escalating and retaliatory trade war, similar to what he says exacerbated the Great Depression of the 1930s. That, and overdoing mass deportation, which could diminish economic activity, worry Alemán.

“We need landscapers, people in kitchens, and people to clean [hotels], and that source of labor comes largely from the undocumented pool,” says Cutts. “We also need engineers and well-trained people. If we curtail all legal and undocumented immigration, we put pressure on wages, which is inflationary. We make it hard for companies to grow because they can’t get the labor they need.”

Cutts also points to Primerica’s Household Budget Index, which tracks the purchasing power of middle-income families. “You ask about the probability of recession. Well, taking into account [higher costs] of necessities, [families] are just barely above where they were in January 2019,” she says. “Some 70% of families surveyed say their income is not keeping up with inflation.” These numbers, Cutts suggests, make Americans susceptible to an economic shock and could cause a recession.

Food inflation is still persistent, specifically the price of eggs, which underlines another potential ticking economic bugaboo. “Avian flu is not going away,” Cutts says. “The solution seems to be to kill all the birds. So, farmers are wiping out their flocks, but it seems like that’s not working—and it’s spreading to livestock.”

What about the stock market, Big Tech stocks like Nvidia, in particular, getting deep-sixed this past week by DeepSeek, the Chinese upstart that apparently produces a cheaper form of artificial intelligence? “The expectations on the AI sector and the rate of growth are concerning and might be a bubble,” says Alemán. “This could trigger animal spirits in the wrong direction. I don’t think this has the ability to bring down the U.S. economy, but it starts to scratch the surface.”

It’s also worth noting that DeepSeek calls into question the mind-boggling capital expenditures that Big Tech has been pouring into AI. My colleague Adam Levine notes that Amazon.com, Microsoft, Alphabet’s Google, and Meta Platforms “have combined for $343 billion in capital expenditures largely for building out AI data centers,” with the promise of tens of billions more going forward. If this megaspend turns out to be mostly for naught, well, it certainly won’t boost economic growth.

Speaking of spending, the CEO of a boldface-name private-equity group whom I lunched with this past week expressed concern over the federal deficit, which is expected to climb from $1.9 trillion this year to $2.7 trillion by 2035, according to the Congressional Budget Office’s economic outlook. It’s easy to imagine the Treasury needing to fund that debt with higher bond yields, which would be inflationary—and potentially recessionary.

Monetarist economist Steve Hanke of Johns Hopkins University notes a significant contraction in money supply, which he says has historically been recessionary, though he acknowledges that his theories have fallen out of fashion. “[Federal Reserve Chair Jerome] Powell has been adamant that the changes in the quantity of money don’t have any material effect on economic activity or inflation, which is complete nonsense,” Hanke says. Less money makes for less economic activity, he argues, which he says will engender an economic slowdown this year.

For now, at least, recessionary talk comes from outliers, and any number of Americans are content to celebrate the moment. A recent New York Times article on what the president’s supporters want for the future of America included a photograph and quote from one Robert Shinkle, from the Ohio Department of Development administrative staff in Sugarcreek Township, Ohio. Shinkle, resplendent in a shimmering suit, said, “We expect that Trump will usher in a new golden era for America. That’s why we’re dressed the way we are. This is the beginning of the Roaring ’20s 2.0.”

Let me pose the question again: What could possibly go wrong?

Stocks of companies in the power-generation business got short-circuited this past week in the wake of the DeepSeek imbroglio. The thinking is that if the Chinese AI start-up’s low-cost model proliferates, tech companies won’t need massive amounts of power for their data centers. But at least one CEO close to the action is unperturbed.

“It shouldn’t really have affected us because of the significant orders we already have,” says Ian Edwards, CEO of AtkinsRéalis Group, a Montreal-based company that maintains, restarts, and builds nuclear power plants. Yes, his stock has dropped 7.6% this past week, but Edwards says the DeepSeek news won’t affect the need for nuclear power. “We’re going to move to electric vehicles, and manufacturing wants to go electric,” he says. “Eighty percent of the world’s electrical energy is now fossil fuel. Most countries are looking to get to net zero by 2050.”

Only 20% of AtkinsRéalis’ revenue comes from the nuke business. The majority is derived from managing and advising on large construction projects. But it’s the nuclear piece of the company that has Wall Street lit up.

“Our nuclear business grew 35% last year,” he says, some three times its engineering services business, benefiting from the so-called nuclear renaissance, which has the company refurbishing or in discussions to restart or build new nuke plants in Canada, Argentina, Romania, and South Korea. Even with the dip this past week, AtkinsRéalis stock is up 171%, versus 36% for the S&P 500 index over the past three years.

Before that rebirth, AtkinsRéalis’ nuke business, now called Candu Energy, which it bought from the Canadian government in 2011 for a pittance of $15 million in that country’s currency, was a moribund enterprise engaged in maintenance and decommissioning. Today, Edwards says, it has a C$4 billion backlog of orders.

Like the nuclear power business, AtkinsRéalis, formerly named SNC-Lavalin, went through its own dark period. From the 1990s into the 2000s, the company was scarred by a series of scandals and litigation. And so, Edwards, who became CEO in 2019, had a major maintenance and refurbishment of the internal kind to sort through. Now, investors are counting on the company and the nuclear business to continue to rebound.