The first 100 days of President Donald Trump’s second term have jolted the U.S. economy, but not enough to trigger a recession on their own, according to a new economic forecast from Beacon Economics. Still, the firm warns that the probability of a downturn in the next year has increased.

Beacon now puts the chance of a recession at 30%, its highest estimate since the COVID-19 pandemic. That figure remains lower than the 45% average in the Wall Street Journal’s most recent survey of economists.

Despite political volatility, the forecast anticipates improved economic growth in the second quarter of 2025, driven by solid consumer spending and employment data.

However, Beacon warns that the economy is increasingly overheated, with major risks stemming from structural imbalances in household finances, an expanding federal deficit, and heavy reliance on foreign capital.

“We’re most worried about how the instability brought on by the administration’s actions will impact severe structural problems that have been building for years,” said Christopher Thornberg, founding partner at Beacon Economics. “The imbalances forming today are as profound and dangerous as they were in the run-up to the Great Recession.”

The forecast criticizes Congress for exacerbating fiscal issues, pointing to efforts by the Republican-led legislature to extend and expand Trump-era tax cuts while dismissing budgetary norms. This comes as the federal deficit reaches record highs.

Unlike the last recession, which was fueled by household debt, the current risks are linked to public sector borrowing. The United States imported $1.25 trillion in capital in 2024 to finance its spending, a reliance that leaves it vulnerable to shifting foreign investor confidence.

Beacon cautions that if the U.S. dollar depreciates significantly, interest rates could spike. That scenario could trigger severe consequences including escalating deficits, budget cuts, tax increases, or even the risk of default.

Trump’s unpredictable trade policies have rattled markets, the report notes, but have yet to cause lasting economic harm.