The Trump administration’s optimistic outlook on the country’s growth prospects is at odds with gloomy forecasts from economists. While Commerce Secretary Howard Berman expressed confidence in the economy, experts point to several warning signs that could indicate a recession.
Trade policy uncertainty, fueled by ongoing tariffs and their stop-start implementation, has led to rising stock market volatility and questioning about the direction of US trade policy. The Trade Policy Uncertainty index has reached record highs, making previous spikes during pandemic and the China trade war look like blips on the radar screen.
Inflation expectations are also a concern, with year-ahead inflation expectations rising to 4.9 percent in March, the highest reading since November 2022. Consumers’ persistent concerns about high prices for key household staples, such as eggs, reflect the impact of tariffs.
The NFIB’s Uncertainty Index suggests that businesses remain uncertain about future sales growth due to stagflation, which erodes profit margins while passing costs onto consumers. The St. Louis Federal Reserve’s data shows economic policy uncertainty and trade policy uncertainty rising in recent months to levels not seen since 2019.
To determine if a recession is imminent, economists will be watching closely for two consecutive quarters of contraction and a drop in employment. While the US economy expanded 2.4 percent in the fourth quarter, slightly ahead of forecasts, unemployment rose slightly in February, leaving room for concern about whether the administration’s policies could tip the balance towards a recession.
As the economic landscape continues to shift, economists will be closely monitoring developments to determine if the country is heading into a recession.
Source: https://www.newsweek.com/five-recession-indicators-usa-trump-tariffs-economy-downturn-2051996