Recessions often go unnoticed until they are already underway, as indicated by the National Bureau of Economic Research (NBER), who define a recession as a significant decline in economic activity over several months. Historical instances reveal that economic downturns, like the Great Recession starting in December 2007 or the brief Covid-19 recession beginning in February 2020, were only recognised long after they commenced. This raises the question: Are we already in a recession triggered by President Trump’s tariffs?
Economists suggest the answer could be affirmative, looking for indicators beyond mere hindsight of negative growth. This speculation impacts the financial decisions of everyday Americans and businesses preparing for challenging economic conditions due to ongoing tariffs. According to Michael Madowitz from the Roosevelt Institute, the crucial question may not be whether we were in a recession but how one can assess local economic health without waiting for formal declarations.
The first sign analysts are monitoring is a decline in consumer confidence. Madowitz states that this recession, if occurring, would largely stem from tariffs hitting consumer demand directly. Uniquely, it transpires that consumer sentiment has plummeted; a survey indicated an 11% drop in April, falling to a concerning 50.8—worse than during previous recessions. An economist from Georgetown University, Harry Holzer, warns of potential consequences: as consumer demand dwindles, businesses may resort to layoffs, amplifying unemployment and reducing spending capacity.
This article explores three signs suggesting the US may already be in a recession, despite no formal acknowledgment. Indicators include declining consumer confidence due to Trump’s tariffs, troublesome trends in the bond market, and falling gas prices that may signal declining economic activity.
In summary, three major indicators suggest the US might be teetering on the edge of a recession. These include decreasing consumer confidence driven by expectations of higher prices due to tariffs, troubling activity in the bond market signalling investor uncertainty, and surprisingly low gas prices which historically correlate with falling economic activity. Each of these elements weaves a narrative of caution as economists and consumers alike weigh their options amid evolving economic landscapes.
Original Source: www.vox.com