Recent discussions in the U.S. have raised concerns about a potential recession that may already be underway, though many are unaware of it. The traditional definition of a recession is two consecutive quarters of declining GDP, but current economic indicators suggest that the country might be heading in that direction.
Economic signals have been mixed. While the stock market has seen a downturn—with the Dow Jones dropping over 5% since its peak in December—other factors also suggest trouble. For example, the S&P 500 and NASDAQ have experienced similar declines, which could influence consumer behavior, especially since a significant portion of Americans own stocks.
Trade tensions are another contributing factor. The U.S. has a trade deficit exceeding $1 trillion, and the recent imposition of tariffs has created uncertainty in the market. Companies are reportedly delaying hiring and investment decisions due to fears about these tariffs and their potential impact on business.
Job growth has also slowed. The U.S. economy added 151,000 jobs in February, a modest increase from January but significantly lower than the 307,000 jobs added in December. Layoffs have surged, with over 170,000 reported in February alone, marking the highest level of job cuts since 2008.
Consumer confidence is wavering as well. The Consumer Confidence Index dropped seven points in February, reaching its lowest level since August 2021. Additionally, the yield curve, which often signals economic downturns, has turned negative for treasury securities with maturities up to two years.
The Atlanta Federal Reserve recently reported that GDP may have declined by 2.8% in the first quarter, a concerning adjustment from earlier estimates. Federal Reserve Chair Jerome Powell indicated that the Fed will continue its current policies until the effects of recent government actions become clearer.
Overall, while the economy has been supported by consumer spending, various troubling signs, including reduced investment, layoffs, and declining confidence, suggest that the U.S. could be on the brink of a recession. As the situation develops, many are watching closely to see how these factors will play out in the coming months.