Economists have weighed in on the possibility of a U.S. recession with Newsweek, highlighting the warning signs and what individuals and families can do should one occur.
Some believe that the back-and-forth movement on tariffs, associated stock market volatility, and marked declines in consumer confidence have set the stage for a significant economic downturn in America’s future.
“It is next to impossible for the private sector to plan ahead when there are so many policy flip-flops,” David Rosenberg, founder and president of Rosenberg Research, told Newsweek. “The level of economic and political uncertainty is unprecedented.”
“The risks of recession have risen quite significantly,” said KPMG chief economist Diane Swonk. “We are not there yet and could see a course correction but are moving closer to the edge.”
How Could Donald Trump Cause a Recession?
Experts largely agree that President Donald Trump’s tariff policies have, at least in the short term, reduced confidence in the United States economy and among its key players.
Pushpin Singh, the managing economist at the Center for Economics and Business Research, told Newsweek that constant trade-related developments had put downward pressure on already shaky consumer confidence and spending—”a key pillar of U.S. economic resilience in the post-pandemic era.”
However, he said the more concerning threat had been the “unpredictable nature of tariff announcements, many of which have been swiftly reversed after initial statements.”
Singh said this created a “climate of uncertainty” for American businesses and consumers, leading to a “general downgrade in the U.S. economic outlook.”
Like Singh, economist Gary Hufbauer said, “The on-again-off-again tariff story is tremendously disruptive to business.”
“It completely erodes any certainty about the level of tariffs six months or a year from now,” Hufbauer told Newsweek. “In turn, business firms put any expansion plans on the shelf. Together with the fall in consumer confidence, that sets up the economy for a recession.”
Both Singh and Hufbauer spoke to Newsweek before the most recent consumer confidence survey from the University of Michigan, released Friday. According to the report, the Consumer Sentiment Index slid another 10.5 percent in March to 57.8, well below consensus forecasts of 63.1. Declines in confidence were measured across all groups by age, education, income, political affiliation and geographic region.
The year-ahead inflation outlook, meanwhile, spiked to 4.9 percent from 4.3 percent in February, its highest level since November 2022. Long-term inflation expectations jumped from 3.5 percent in February to 3.9 percent in March, marking the biggest month-on-month rise since 1993.
David Wessel, a senior fellow in economic studies at Brookings, is less pessimistic. He told Newsweek that stock market fluctuations and gloomy forecasts from financial institutions do not themselves indicate a looming downturn. He repeated Nobel laureate Paul Samuelson’s famous quip that the stock market “has predicted nine of the last five recessions.”
Rosenberg listed three indicators people should monitor as signs of a coming recession: consumer spending data, initial jobless claims (“to gauge whether the rapid decline in hiring rates is now being followed by outright layoffs”), and capital spending intentions reflected in monthly durable goods orders.
What Would a Recession in 2025 Look Like?
Should a recession materialize, economists predict this would be marked by persistent inflation, tighter monetary policy from the Federal Reserve, slow consumption growth, challenges in the labor market, and broader declines in production.
“My guess is that unemployment rises from 4 percent to 5 percent, and GDP drops by 1 percent or 2 percent over the second and third quarters of 2025,” said Hufbauer.
According to the most recent jobs report from the Bureau of Labor Statistics, U.S. unemployment currently sits at 4.1 percent, having previously dipped from 4.1 percent to 4.0 percent between December and January.
“I think it is too soon to know what a possible recession would look like. It is unlikely to closely resemble 2008 or 2020, our two most recent recessions,” said Jesse Rothstein, a professor of public policy and economics at the University of California, Berkeley.
“If we have one, it will likely be driven by business retrenchment in the face of uncertainty about current and future economic conditions,” he added.
How To Survive a Trump Recession
The consensus wisdom is that minimizing expenses and avoiding risk are key to preparing for and navigating a recession.
“Recession or not, the best way to protect yourself financially is to live on less than you make, get out of debt (and stay out), and save three to six months of expenses for emergencies,” personal finance expert George Kamel previously told Newsweek.
“Economic downturns are unpredictable, but financial peace comes from having a solid plan—not reacting to headlines.”
Regarding investments, Rosenberg said that individuals “immediately be cashing in on their winnings from the stock market these past few years and shift to areas that prove to be reliable refuges in troubled times.”
He cited gold, silver and “high-quality bonds” as reliable refuges in times of economic uncertainty.
In terms of where to invest, he added that there were “alluring opportunities” in foreign markets, such as in Europe and Asia, where “valuations are far less expensive” than the U.S.
“Canada, with its super-cheap currency and near-record cheap [price-to-earnings] multiples relative to the S&P 500, should probably also be on the radar screen for American investors,” he added.
Financial adviser Carl Richards said that the time to begin preparing for a recession is often well before one is already in motion.
“Your financial plan should incorporate the idea that there will be recessions in the U.S., and that you will not know when they are going to occur,” Richards told Newsweek. “We should build a plan that’s sort of all-weather.”
However, he said there is plenty that those wishing to shore up their finances can do to lessen the blow of an economic downturn, including “looking around the edges” of your expenses. He recommended cutting back or consolidating the use of video streaming services and rethinking larger purchases, mentioning his own decision to cancel a recent order for a new car.
“Avoid taking on more risk,” he concluded, “then see where you can reduce.”
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