Various experts, utilizing several key financial indicators, are stating that the odds of a recession in the United States may be getting higher.
On the week of March 10, a new survey from the University of Michigan showed that consumer sentiment had dropped for the third consecutive month. It also highlighted a spike in anxiety related to inflation, with consumers expecting to see a rise over the next 12 months. This comes after the Federal Reserve Bank of Atlanta suggested that economic growth might be negative in Q1 2025.
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On March 13, Wall Street’s sell-off also hit a new low, dragging the S&P 500 more than 10% below its record into a correction. Other major indexes, like the Russell 2000 and the tech-heavy Nasdaq Composite, had already fallen into correction.
Beyond this, multiple major banks—including JP Morgan and Goldman Sachs—are sounding alarms about the economy by slashing growth expectations. Yet there’s some disagreement across the economic spectrum as to whether a recession is being indicated. The New York Federal Reserve pointed to healthy economic growth in Q1 of 2025.
Yet, there’s some disagreement across the economic spectrum as to whether a recession is being indicated. The New York Federal Reserve pointed to healthy economic growth in Q1 of 2025.
With consumers and experts alike concerned about a recession, particularly amid major changes being made by the Trump Administration—such as proposed reciprocal tariffs and mass layoffs—here's what you need to know.
What is a recession?
A recession can be defined as a “significant decline in economic activity spread across the economy lasting more than a few months, normally visible in production, employment, income, and other indicators,” says Alex Jacquez, chief of policy and advocacy at the economic think tank Groundwork Collective.
Jacquez used to work at the National Economic Council under the Biden Administration, and says that it is normal for there to be downturns of certain sectors during each Administration—as well as certain misses on the economic side—but the real indicators of recession are when these downturns run across sectors.
He points to specific indicators of a recession, including whether consumers are expecting inflation to be worse in the future, which impacts people’s spending habits, then “spills over” into the real economy.
“What you need to keep an economy chugging is businesses investing, businesses hiring, and people spending money,” Jacquez says. “If people are apprehensive about whether their jobs are going to go away or whether there are going to be more layoffs in the future, you're gonna start to see a pullback on spending.”
Is the U.S. heading into a recession under Trump?
Prediction can be a tricky game. As such, Jacquez, like many economists, prefers to stay away from the binary answer of “yes” or “no” when it comes to whether a recession is coming. But he says the current indicators are trending downwards, and if they continue in that direction, it will spell trouble for the economy.
The U.S. consumer market saw a sharp decline last month for the first time in over two years, which Jacquez says is starting “to indicate that the resilient consumer is no longer spending at the pace that they used to be.” Consumer inflation expectations also soared in February.
It’s a self-fulfilling prophecy, says Jacquez. When people are feeling good about the economy, it pushes them to spend and stimulate buying beyond just the essentials, to make long-term plans, to renovate and buy a home. If people are fearful and unsure about things such as whether or not mortgage prices will rise, they will not spend as much. Thus, the expectations of a recession can potentially have a “spiraling effect.”
Trump’s tariffs—including proposed reciprocal tariffs worldwide and a more intense trade war against America’s three biggest trading partners in Mexico, Canada, and China—are also a pivotal factor. Businesses are uncertain, Jacquez says, about what the economy is going to look like after the fallout of these tariffs ripple down different industries and the stock market. This can be unsettling, as what businesses “crave most” is certainty.
“It's a very difficult time to invest in the United States if you don't know what your inputs are going to cost over a month or six months from now,” Jacquez argues.
This uncertainty is bolstered by the cuts that Elon Musk has made with the Department of Government Efficiency (DOGE)—cuts that spearheaded a major spike in layoffs in February.
According to February employment data released by the U.S. Bureau of Labor Statistics on March 7, in the first full month of Trump’s presidency, the U.S. added over 150,000 jobs, yet the unemployment rate edged up slightly. What's more, the labor force participation rate slipped. Major spikes in unemployment rates are a key indicator of recession.
Though the numbers fell short of what some economists were expecting, the Trump Administration maintains that the job report is positive.
“Under President Trump, the private sector is leading the way—93% of the job gains in February were in the private sector. This is great news for American workers and families,” said White House Press Secretary Karoline Leavitt in a statement. “The Trump Administration will continue to work hard to implement pro-growth policies and push Congress to enact the Trump Economic Agenda.”
Read More: Wall Street Is Losing Patience With Trump
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Have Trump, Musk, or other government officials commented on a possible recession?
Trump was asked if he is expecting a recession this year during an interview on Fox News' Sunday Morning Futures with Maria Bartiromo, which aired on March 9.
"I hate to predict things like that. There is a period of transition, because what we're doing is very big. We're bringing wealth back to America. That's a big thing, " Trump said. "And there are always periods of... it takes a little time. But I think it should be great for us."
Commerce Secretary Howard Lutnick was also asked about recession fears during his own interview on NBC's Meet the Press, which aired shortly before Trump's sit-down. Interviewer Kristen Welker said: "Major banks like JP Morgan and Goldman Sachs now say a recession in the next 12 months is becoming more likely. Should Americans brace for a recession?"
To which, Lutnick responded: "Absolutely not. Anybody who bets against Donald Trump. It's like the same people who thought Donald Trump wasn't a winner a year ago. Donald Trump is a winner. He's going to win for the American people. That's just the way it's going to be. There's going to be no recession in America."
Lutnick went on to praise Trump's approach to tariffs, reaffirming his stance that the American economy is set to be in a strong position. "We'll unleash America out to the world. Grow our economy in a way we've never grown before," he said. "I would never bet on recession. No chance."
Before this, Trump had acknowledged on his social media platform, Truth Social, that there may be “some pain” felt due to the tariffs. Ultimately, though, he said it “will all be worth the price that must be paid.”
But experts like Jacquez have their doubts.“They're looking at the same numbers that we are,” Jacquez says of the Trump Administration. “If I were still in the White House, I would be extremely concerned about the trend that we're seeing across a wide variety of indicators across sectors of the economy.”
Musk has responded to the Atlanta Federal Reserve’s concerning projection, stating on X: “A more accurate measure of GDP [Gross Domestic Product] would exclude government spending.” His comment comes as he makes efforts to slash public spending through DOGE, including mass layoffs, the defunding of federal research agencies and USAID, and the end of thousands of government contracts.
On March 13, Vice President J.D. Vance appeared on Fox News’ The Ingraham Angle, and addressed concerns about a recession to host Lauren Ingraham. When asked if he could “rule out” a recession, Vance said “you can never predict the future” but he thinks the “fundamentals of the economy are quite strong.”
“Rome wasn’t built in a day of course, this is not going to happen overnight, but I think both business and workers are ultimately going to benefit from President Trump’s policies,” he said.
Treasury Secretary Scott Bessent also failed to rule out a recession when he was asked about the public’s disapproval ratings of Trump’s handling of the economy and the sharp dip in consumer sentiment during a March 16 appearance on NBC’s Meet the Press. Bessent said “there are no guarantees” when it comes to the economy but he’s “not worried about the markets,” and that corrections are “healthy.”
“I can predict that we are putting in robust policies that will be durable,” he said. “Over the long term, if we put good tax policy in place, deregulation and energy security, the markets will do great.”
When was the last U.S. recession?
Though certain experts predicted that the U.S. would slip into a recession in 2023, the last recession was actually during the COVID-19 pandemic in early 2020—triggered by the health crisis. This caused a “sharp contraction of economic activity and huge job losses in early 2020, as government restrictions and fear of the virus kept people at home and businesses shut,” according to the Center Budget and Policy Priorities (CBPP).
Yet, the federal government enacted many relief and recovery measures, which made the pandemic recession the “deepest” and the “shortest” recession in the post-World War II era, according to the CBPP. These recovery efforts included cash payments to individuals, expanding unemployment coverage, and establishing a federal eviction prevention program.