As of January 9, 2025, the New York Fed's model to predict the likelihood of a recession suggests there is a 29% chance the U.S. will enter a recession sometime in 2025. This figure is down sharply from just two years ago, when the model—which makes predictions based yield spreads between 3-month T-bills and 10-year Treasury bonds—gave a 70% chance of a recession.
Nonetheless, investors may still approach the new year with caution and may be on the hunt for recession-proof picks. Many analysts expect the S&P 500's rally—which has been going more or less continuously since the fall of 2022—to fizzle and perhaps even reverse course in 2025. There are plenty of unknowns, including a shifting regulatory environment, a different set of priorities from the new presidential administration, ongoing military activity in Europe and the Middle East, and much more.
