Ray Dalio: A Recession Is A Close Call

Ray Dalio, founder of Bridgewater Associates, recently shared his concerns about the global economy’s trajectory in a Bloomberg interview. He argues that while much attention is on tariffs and short-term market swings, the real risks lie in deep structural imbalances and political dysfunction, drawing parallels to the turbulent 1930s. Dalio believes a recession is likely, but warns the underlying issues could lead to even greater instability if not addressed.

Here are the key takeaways:

• Ray warns that the global financial system is fundamentally shaky, citing excessive debt and a growing imbalance between what the U.S. spends and what it brings in, with countries like China holding significant amounts of U.S. debt.

• Dalio sees today’s environment as reminiscent of the 1930s, marked by internal political conflict, widening wealth gaps, and deepening mistrust both within and between countries.

• He criticizes the handling of U.S. tariffs, arguing that abrupt policy changes have undermined confidence in America’s reliability, disrupted supply chains, and increased costs, compounding economic uncertainty.

• Dalio believes a recession is “a close call, and it’s probable,” but his bigger fear is that unresolved debt and political strife could trigger a much deeper crisis.

• His proposed solution is for the U.S. to commit to reducing its budget deficit to 3% of GDP, warning that without this, trust in U.S. bonds and the broader financial system could erode further, with potentially severe consequences.