According to Wells Fargo, there is a possibility that the US might not fall into a recession this year as they foresee potential for an economic recovery in the second half of the year. Despite concerns arising from President Donald Trump's recent tariffs and the stock market's significant downturn, the bank remains optimistic about the US economy's trajectory.

Wells Fargo's strategists highlighted several factors indicating that the US could steer clear of a downturn in 2025. They acknowledged that while they have reduced their expectations for US GDP growth, the fundamental economic data remains robust. The bank suggested that any economic weaknesses experienced this year could be seen as a natural regression following the strong performance in 2024.

The strategists emphasized that crucial economic pillars are still in place, which could help limit any slowdown, thereby creating a favorable environment for a moderate growth rebound in the latter part of the year. Some positive indicators include the steady growth of income, even when adjusted for inflation, and the solid job market showing consistent job growth and near-record-low unemployment rates.

Additionally, the rise in household wealth prior to the recent market downturn has provided a buffer for Americans, particularly those with higher incomes. Despite the stock market corrections, household net worth in the US reached a record high in the last quarter of 2024, which has the potential to support spending among wealthier individuals, especially as consumer demand picks up in the coming months. Wells Fargo strategists expressed confidence in upper-income spending as they believe past gains from financial assets can buoy consumption patterns in the foreseeable future.