U.S. recession chances edge up, risk Fed delivers fewer hikes

The Federal Reserve is still expected to raise interest rates again next month and three times next year. However, economists say some risks may cause interest rate raises to slow.

While many developed economies are already slowing, growth in the world’s largest economy is still solid, riding the tail-end of a $1.5 trillion tax cut boost, and official unemployment is the lowest in nearly half a century.

“The economy is facing a growing number of headwinds, including the lagged effects of previous interest rate rises and dollar strength, the uncertainty of trade protectionism at a time when external demand is slowing, and a sense that the support from the fiscal stimulus will gradually fade,” said James Knightley, chief international economist at ING.