A truce in China-US trade or easing US inflation pressure and economic recession risks are cooling down simultaneously.

According to the latest survey, with the United States and China reaching a phase one trade agreement, economists generally expect inflation pressure in the United States to ease, and the short-term risk of economic recession to also decrease. Between May 16th and 21st, 86 surveyed economists lowered their peak forecast for the Personal Consumption Expenditures Price Index (PCE, a core inflation indicator used by the Federal Reserve) to 3.1% by the end of 2025, down from 3.2% in April, and also revised down their expectations for the Consumer Price Index (CPI) at the beginning of 2026. Despite the expectation of economic recession probability dropping from 45% last month to 40%, it still remains significantly higher than the 30% predicted in March. The median expectation for the U.S. GDP growth rate in 2025 was only 1.3%, further down from previous forecasts. Analysts believe that the Trump administration's announcement of a significant reduction in tariffs on Chinese goods this month signals an improvement in bilateral trade relations, but the current tariff level remains significantly higher than before Trump took office in 2017. The impact of tariffs shows a dual nature: on one hand, in order to avoid the surge in imports caused by tariff anticipation (import volumes have experienced the largest increase in nearly five years this year), there was negative GDP growth for the first time since 2022; on the other hand, economists predict that the scale of imports in this quarter will significantly contract, providing some support to GDP. Consumption shows resilience but a slowing growth trend: the expected growth rate of consumer spending in the second quarter was revised up to 1.5% from 1% in April, but it is expected to gradually slow down in the second half of the year. The outlook for business investment is pessimistic, with the expected growth rate for private investment in this quarter being revised down from -3% to -5.2%, and expectations for the coming quarters continue to weaken. Chief economist at Huntington Private Bank, Olu Omodunbi, pointed out: "Although the U.S.-China trade agreement is a positive development, policy uncertainty remains. We expect consumption and investment growth to slow down in 2025 compared to 2024." This cautious outlook is corroborated by persistently low consumer confidence data - the University of Michigan Consumer Confidence Index continues to linger at historic lows. It is worth noting that despite the easing of inflation pressure, economists warn that the drag effect of tariffs on economic growth is still ongoing. The team of economists at Union Bank believes: "Although the increase in tariffs did not cause the economic recession concerns from last month, it has indeed led to a slowdown in economic growth." This assessment is in line with the Federal Reserve's policy challenge of "seeking a balance between inflation and growth."