The US economy is projected to slow down or even enter recession in 2025, despite a temporary pause on tariffs by President Donald Trump. A survey of 46 economists found that there’s a 47% chance of recession, up from 25% in February. The experts attribute the slowdown to Trump’s escalating trade war and its impact on consumer spending power.
The economy grew 2.8% last year, but forecasters predict it will nearly stall in 2025, growing only 0.8%. This is a sharp decline from their previous projection of 1.7% just months ago. The main culprit behind the slowdown is the tariffs imposed by Trump, which have driven up prices and weakened demand.
“The tariffs are weakening activity and weakening demand,” said Barclays economist Marc Giannoni. “Even higher tariffs would be disastrous for the economy.”
The effective US tariff rate on all imports has risen to 30%, up from 23% before the trade war. However, some economists believe that the recent exemptions for electronics products will lower this rate back to 23%. Despite this reprieve, Barclays still expects a recession in 2025.
Another survey of experts found similar bleak views on the US economy. They predict the economy will grow just 0.7% this year and expect overall inflation to rise from 2.4% to 3.4% by the end of the year.
The impact of Trump’s tariffs on consumer spending power is significant, with 70% of economic activity coming from household consumption. Weakening demand due to higher prices will likely sap consumer spending power, leading to a slowdown in economic growth.
While some economists believe that the recent tariff pause may provide some relief, they expect it to extend uncertainty and disrupt business investment. Business investment is projected to grow about 1.2% this year, down from 3.6% in 2024.
In summary, forecasters warn of a looming recession in 2025 due to Trump’s escalating trade war and its impact on consumer spending power. The recent tariff pause may provide some temporary relief, but it is unlikely to change the overall outlook for the US economy.
Source: https://eu.usatoday.com/story/money/2025/04/14/economy-weak-growth-recession-2025/83048077007