Will the U.S. Economy Slide Into Recession in 2025? Experts Remain Divided

 

Economists debate the likelihood of a 2025 recession amid aggressive tariff hikes.

Will the U.S. Economy Slide Into Recession in 2025? Experts Remain Divided

DECK
Conflicting signals from job growth, consumer spending, and sweeping Trump tariffs cloud economic forecasts as economists split on what lies ahead.

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KEY FACTS

1. What: Economists debate the likelihood of a 2025 recession amid aggressive tariff hikes.

2. Where: United States, with global trade implications.

3. When: Predictions center around mid-to-late 2025.

4. Why: Largest U.S. tariffs in a century impact consumer prices and market confidence.

5. How: Indicators such as jobless claims, retail spending, and market volatility feed opposing forecasts.

6. Current Mood: Business and consumer confidence are waning, but spending remains resilient—so far.

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SITUATION SNAPSHOT
Tariffs are back with a vengeance—and so are recession fears. As President Donald Trump delivers the most sweeping import duties in over 100 years, American households and businesses are caught between robust economic data and deepening unease. One moment, retail sales surge; the next, markets plunge. In this atmosphere of contradiction, the question looms larger than ever: Is a recession already underway or still on the horizon?

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WHAT WE KNOW
Recent actions by President Trump have fueled intense economic uncertainty. In the span of just weeks, the administration raised tariffs on Chinese goods to 20%, imposed a 25% duty on steel and aluminum, and announced an across-the-board 10% fee on imports, before easing some measures with a 90-day pause—excluding China.

Job growth remains strong, with 228,000 new hires last month, and retail sales rose 1.4%. Yet economists warn that such figures may reflect pre-tariff “frontloading” rather than sustained growth.

Meanwhile, wage gains continue to outpace inflation, and consumer debt levels are still modest relative to income.

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WHAT’S NEXT
Markets and analysts will be closely watching midyear developments as the tariffs' full effects reach store shelves and wallets. A potential easing of trade tensions—particularly with China—could soften the blow, but progress remains elusive. Key updates are expected from upcoming Federal Reserve briefings and new consumer sentiment data, which may clarify whether confidence collapses further.

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VOICES ON THE GROUND

"A lot of the data looks great in the rear-view mirror," — Ryan Sweet, chief U.S. economist at Oxford Economics.

“Things are changing so much.” — Ryan Sweet.

“The consumer is still in pretty good shape.” — Ryan Sweet.

“There could be deals.” — Joseph LaVorgna, chief economist at Nikko Securities America.

“Traditionally, restaurant spending… is completely discretionary,” — Ryan Sweet.

"People are out and about, they're spending money," — Joseph LaVorgna.

“If we get tariffs, you’re going to get pretty negative effects.” — Jonathan Millar, senior U.S. economist at Barclays.

“It’s a lot about fear.” — Jonathan Millar.

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CONTEXT 
Historically, severe tariffs have preceded economic contractions, and Trump’s current trade agenda marks the most aggressive use of tariffs since the Smoot-Hawley era of the 1930s. While the job market has been a stronghold of the post-pandemic recovery, its durability may be tested if global trade tensions continue unchecked.

Consumer behavior has decoupled from sentiment in recent years, complicating recession predictions. While past downturns followed bear markets and rising bond yields, today’s volatility also echoes the financial crisis of 2008 and the COVID-19 slump.

Nine out of 14 bear markets since World War II have led to recessions, usually within six months, offering a historical precedent that troubles some analysts.

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REPORTER INSIGHT
Behind the stats, uncertainty clings to every sector. Conversations with economists suggest not just a split in prediction models, but a philosophical divide in how to even interpret modern economic signals. In diners and department stores, Americans are still swiping their cards—but economists fear that confidence may soon crash harder than the stock market.