Recession fears have resurfaced this week as the S&P 500 index fell into a correction, sparking concerns about the US economy’s future growth. However, many economists and analysts believe that a full-blown recession is unlikely, with most predicting a moderate slowdown.
Several factors are being closely monitored, including tariffs and consumer spending, which could signal slower-than-expected economic growth. While a recession is possible, especially if cautious US consumers reduce spending and employers lay off workers, the more likely scenario appears to be weaker growth.
Wells Fargo economists point to “solid fundamentals” such as healthy household balance sheets, which they believe will act as a buffer against economic downturns. However, they also note that the economy has already experienced a decline in early 2025 and that tariff uncertainty and federal government job cuts could take a toll.
The latest jobs report showed a gain of 151,000 jobs in February, but analysts are increasingly focusing on whether this trend will continue. The unemployment rate remains low at 4.1%.
CEO Joe Brusuelas from RSM US LLP warns that lower stock prices can lead to reduced spending by wealthy households, which could slow down the economy. However, he believes that the current growth scare is overstated and expects the economy to grow at a rate of 1.5% this quarter.
The ongoing uncertainty surrounding tariffs has raised concerns about their potential impact on the economy. Treasury Secretary Scott Bessent says he’s not concerned about volatility, but chief economist Satyam Panday from S&P Global Ratings sees a 25% chance of a US recession in the next year due to supply-side shocks and other factors.
Despite this uncertainty, many economists remain cautiously optimistic about the economy’s prospects. A separate survey by the Business Roundtable found that CEOs are cautious about the next six months but also see opportunities for growth. The American Bankers Association forecasts GDP growth of 2.1% in 2025 and 2026, although it sees a 30% chance of recession this year and next.
Source: https://www.investopedia.com/how-worried-should-you-actually-be-about-a-recession-update-11696638