Tightrope Economy

Good morning, The economy is walking a tightrope, AI just got humbled by a puzzle, and India sent a Russian oil tanker packing. If this week had a theme, it’d be “try again.”

Stay sharp and try again if you fail!

ECONOMY
Will the U.S. economy keep Its balance?

The risk of a U.S. recession is nearing 50%, stirring fresh concerns about the economy’s trajectory amid inflation worries and slowing growth. A Deutsche Bank survey of 400 respondents pegs the probability of a downturn at 43% over the next year, adding to growing unease despite low unemployment and steady economic activity.

While Federal Reserve Chair Jerome Powell maintains that the economy remains “strong overall,” the Fed has lowered its GDP growth estimate to 1.7% and raised its inflation outlook to 2.8%, fueling fears of stagflation. Markets are feeling the pressure. Bond expert Jeffrey Gundlach sees a 50-60% chance of a recession, while Morgan Stanley and Barclays analysts point to slowing growth and sticky inflation. Even UCLA’s Anderson School has issued a rare “recession watch,” warning that trade policies could accelerate an economic downturn.

As policymakers weigh their next moves, the U.S. faces a delicate balancing act. Whether the economy steers clear of recession or stagflation may depend on key decisions in the months ahead.

ENERGY
India shuts the door on Russian oil tanker

An oil tanker carrying Russian crude was denied entry into an Indian port over documentation issues, a rare move that suggests India is tightening its oversight of Russian oil shipments. The Andaman Skies, a Tanzania-flagged vessel loaded with 100,000 metric tons of Russian Varandey crude from Lukoil, was en route to the Vadinar Port for delivery to Indian Oil Corp. before authorities turned it away. Sources say the ship lacked valid seaworthiness certification from an approved body, despite having visited India as recently as December.

India, the biggest buyer of seaborne Russian crude, imported about 35% of its total crude from Russia in 2024. However, recent U.S. sanctions targeting Russian oil exports have made it harder for sellers to secure vessels, leading India to refine its approach—agreeing only to buy oil from non-sanctioned ships and companies. This incident highlights the growing complexities of the Russian oil trade, as geopolitical tensions and regulatory pressures reshape global energy flows. Whether this signals a long-term shift in India’s buying patterns remains to be seen.

AI & TECHNOLOGY
New AGI test raises the bar

AI may be advancing, but when put to the test, it still falls short of true general intelligence. A new challenge from the Arc Prize Foundation, co-founded by AI researcher François Chollet, has left most AI models struggling. The ARC-AGI-2 test, designed to measure an AI’s ability to recognize patterns and adapt to unseen problems, has stumped even the most advanced models. OpenAI’s o1-pro and DeepSeek’s R1 barely managed 1.3%, while heavyweights like GPT-4.5, Claude 3.7 Sonnet, and Gemini 2.0 Flash scored just 1%. In contrast, a panel of 400 human participants averaged 60%.

This new test is a major upgrade from its predecessor, ARC-AGI-1, which was eventually beaten by OpenAI’s o3 model last year. However, o3’s victory came at a cost—it required immense computing power. ARC-AGI-2 fixes this flaw by introducing an efficiency metric, forcing AI to interpret patterns in real time instead of relying on brute force. The challenge is clear: AI must not only solve problems but do so efficiently. With the Arc Prize 2025 offering a challenge to reach 85% accuracy at just $0.42 per task, the race is on to prove whether AI can truly match human intelligence.