A mix of soft data and growing concerns from consumers, businesses, and financial markets is raising alarm bells about a potential economic downturn in the US. While there’s currently no concrete evidence to confirm a recession, warning signs are piling up.
The big picture suggests that the economic ground may be shifting beneath our feet, driven by a confluence of forces from Washington, including new tariffs and cuts to the federal workforce. This uncertainty is affecting companies’ decisions on capital spending and hiring.
Recent data points include a plunge in consumer sentiment surveys, such as the University of Michigan’s preliminary survey for March, which showed sharply lower expectations for the future among both Democrats and Republicans. The S&P 500 also fell into official correction territory, despite rebounding on Friday.
Surveys of business leaders have shown less confidence in the outlook, with warnings from airlines, retailers, and even big-box stores like Walmart and Dollar General about underwhelming consumer demand.
While it’s essential to consider the noise in these data points, what’s striking is how pervasive these warning signs have been lately. The Trump administration’s talk of a potential period of economic weakness could be necessary suggests that hard days ahead are possible.
The Federal Reserve may face challenges cutting rates as much as usual during a downturn due to elevated inflation. However, this doesn’t necessarily mean a recession is imminent or inevitable.
The US economy is like a tanker ship, and it takes significant efforts to stop its progress. The current shifts in Washington might slow the ship but not necessarily halt it. For now, the uncertainty remains, and investors and policymakers should remain vigilant.
Source: https://www.axios.com/2025/03/15/economic-indicators-recession-risk