Short Answer: No full-blown recession has occurred yet, but risks are rising and many economists warn of potential trouble ahead.
Where We Stand Now
- Market indicators remain generally positive, with stock behavior signaling confidence that a recession is not imminent.
- The U.S. economy experienced a slight contraction in early 2025, mainly due to import timing ahead of tariffs. Experts agree this alone does not confirm a recession.
Warning Signs
- Elevated tariffs have contributed to inflation pressures and slower growth. Forecasts expect GDP growth to slow to around 1.6% in 2025, with inflation remaining above target.
- Consumer spending has cooled noticeably, raising concerns about economic momentum.
Economist Outlooks
- Some leading banks estimate a 25 to 40 percent chance of recession during 2025.
- Analysts note ongoing economic headwinds but also highlight the possibility of avoiding recession with modest growth.
Mitigating Factors
- The labor market remains relatively strong, with steady job growth and stable unemployment rates.
- Consumer spending, while slower, remains above pre-recession levels.
- Some experts believe the economy could outperform expectations, maintaining growth around 1.5 to 1.7 percent through 2025 and 2026.
Summary
While a recession has not yet materialized, there is a moderate risk given current economic pressures such as tariffs, inflation, and slowing demand. Continued resilience in employment and spending may delay or soften a downturn. Much depends on future trade policies, inflation trends, and central bank decisions.
