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Fitch Warns: AI Pullback, 35% US Stock Crash Could Trigger 2027 Recession
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Moneycontrol•28-09-2026, 12:02
Fitch Warns: AI Pullback, 35% US Stock Crash Could Trigger 2027 Recession
- •Fitch Ratings warns that a sharp correction in equity markets and a pullback in AI-related investment could push the US economy into recession and drag global growth below 1% in 2027.
- •The rating agency modeled a downside scenario involving a 35% decline in US equity prices, a 15% fall in non-US equities, and an additional confidence-driven shock to US private investment.
- •Under this scenario, the US economy would enter recession with GDP down by 0.6% in 2027, and global growth would fall below 1%, nearing stagnation in per capita terms.
- •The AI boom currently provides significant support to the US economy through rapid growth in technology capital expenditure and higher equity-market wealth supporting consumer spending.
- •The impact of such a shock would extend globally, with the eurozone and China seeing growth 0.8 percentage points below baseline, and countries like Canada, Mexico, and South Korea also significantly affected.
Key Questions Answered
Fitch Ratings warned that a sharp 35 percent crash in US stock prices, a 15 percent drop in non-US equities, and a confidence-driven shock to private capital expenditure could push the US economy into a recession in 2027.
Under Fitch's downside scenario, global growth would fall below 1 percent, bringing it close to stagnation, with eurozone and China growth dropping 0.8 percentage points below baseline forecasts while trade-linked nations like Canada, Mexico, and South Korea would also face major impacts.
The AI boom currently supports the US economy via rapid growth in technology capital expenditures and through elevated equity-market wealth that boosts consumer spending.
