Ray Dalio, founder of Bridgewater Associates, warned on Sunday (April 12) that the US economy is approaching a critical turning point and may be headed toward something worse than a recession if tariffs and other economic policies are not handled carefully.
“I think that right now we are at a decision-making point and very close to a recession,” Ray Dalio told NBC News. “And I’m worried about something worse than a recession, if this isn’t handled well.”
Dalio’s remarks came in response to moderator’s question on whether President Donald Trump’s tariff policies could push the US into a recession.
Echoes of the 1930s
Dalio said the current combination of domestic political division, mounting debt, and shifting global power dynamics mirrors a pattern seen throughout history.
“We are having profound changes in our domestic order … and we’re having profound changes in the world order,” Dalio said. “Such times are very much like the 1930s.”
Dangerous mix: Debt and rising powers
Dalio described the ongoing global realignment—particularly the challenge from rising powers—as “very, very disruptive,” and said mishandling these pressures could deepen the crisis.
“How that’s handled could produce something that is much worse than a recession,” he cautioned.
Call for fiscal responsibility
Dalio urged lawmakers to reduce the federal budget deficit, suggesting it be brought down to 3% of GDP in order to stabilise the nation’s financial standing.
“If they don’t, we’re going to have a supply-demand problem for debt at the same time as we have these other problems,” Dalio warned, “and the results of that will be worse than a normal recession.”
Worst-case scenario: Beyond economics
Asked to elaborate on his fears, Dalio painted a grim picture of a future defined by financial instability, social unrest, and even the threat of military conflict.
“I’m worried about the value of money, internal conflict that is not the normal democracy as we know it, an international conflict in a way that is highly disruptive to the world economy, and could even be a military conflict,” he said.
A track record of warnings
Dalio previously predicted the 2008 financial crisis. As early as 2007, Bridgewater flagged “imbedded risks in the system” and warned interest rates would continue to rise “until there is a cracking of the financial system.” Months later, the global recession began.
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