Years of an economic slowdown are mounting as leading financial experts, including DoubleLine Capital CEO Jeffrey Gundlach, warn of heightened recession risks. The so-called Bond King believes the probability of a U.S. recession has climbed to 50 percent to 60 percent, a sentiment echoed by a recent Deutsche Bank survey, which puts the likelihood at 43% over the next 12 months.
Gundlach, whose firm manages approximately $95 billion, expressed concern about increased market volatility and economic uncertainty. Speaking on CNBC’s “Closing Bell,” he urged investors to adjust their portfolios, citing growing risks in U.S. securities.
“I believe that investors should have already upgraded their portfolios … I think that we’re going to have another bout of risk,” Gundlach told CNBC. He noted that DoubleLine has reduced leverage in its funds to the lowest level in its 16-year history, signaling a defensive strategy amid economic headwinds.
Gundlach’s comments come in the wake of the Federal Reserve’s latest policy update, which downgraded economic growth projections and raised inflation expectations. The Fed now forecasts GDP growth at just 1.7 percent for 2025, the slowest non-pandemic rate since 2011. Meanwhile, core inflation is expected to remain at 2.8 percent, well above the central bank’s 2 percent target, CNBC reported.
Compounding economic fears, recent tariff policies under President Donald Trump have fueled uncertainty in global markets. The S&P 500 experienced a sharp 10 percent correction last week, recovering slightly but still trading 8 percent below its February peak. Morgan Stanley analysts warn that the combination of slowing growth and persistent inflation raises the specter of stagflation, a challenge not seen since the 1980s.
Despite these warnings, Federal Reserve Chair Jerome Powell remains cautiously optimistic, stating that the economy is still “strong overall.” However, Powell and his colleagues acknowledge the policy dilemma ahead, as balancing inflation control with economic growth becomes increasingly difficult.
A Deutsche Bank survey, conducted from March 17-20 among 400 respondents, found that 43 percent believe a recession is likely within the next year, CNBC reported. This aligns with rising business and consumer sentiment data suggesting increased concerns over an economic downturn.
Major financial institutions—such as Barclays and UCLA Anderson Forecasting Center—have issued recession warnings, with UCLA even introducing its first-ever “recession watch” designation for the country. The reasoning is that “if fully or nearly fully enacted,” Trump’s vision for a new economy could cause a downturn in the next year or two. The watch indicates that tariffs, immigration crackdowns, and federal workforce reductions may precipitate an economic downturn.
“What’s more, the recession could end up being stagflationary,” according to UCLA, CNN reported.
Gundlach advises investors to diversify away from U.S. markets, citing better opportunities in Europe and emerging markets.
“It’s probably time to pull the trigger for real on dollar-based investors diversifying away from simply United States investing. And I think that’s going to be a long-term trend,” he stated.
