Recession worries seize the market. How to really know what’s coming.
Subscribe to enjoy similar stories. Uncertainty around tariff policy has weighed on consumer and business confidence in recent months, yet other indicators may prove better predictors of whether the U.S.
economy is truly heading for a recession in the coming months. President Donald Trump’s tariff policies have created uncertainty, along with a pullback in consumer and business confidence.
The New York Federal Reserve Bank’s February Survey of Consumer Expectations released Monday found that 27.4% of households expect their financial situation will be worse a year from now, the highest level since November 2023. The latest NFIB Small Business Optimism Index released Tuesday was no better, showing a decline for the second month in a row, falling by 2.1 points to 100.7.
Business uncertainty soared to the second-highest level in the 50-year history of the NFIB survey. The pullback in confidence has generated speculation that a sentiment-driven recession could be in the cards this year, a possibility Trump wouldn’t rule out during an appearance on Fox News on Sunday.
He said, “There is a period of transition, because what we’re doing is very big." The comments sent markets into a tailspin on Monday, yet sentiment data has been a bad economic indicator in the past few years, says Philipp Carlsson-Szlezak, Boston Consulting Group’s global chief economist. “The new administration’s policy may spur excitement or despair amongst two different neighbors, but their spending patterns are unlikely to change meaningfully as long as their jobs continue to provide spending power." So what is worth watching to assess the risk of a recession? Several leading economists are focusing on spending and labor data to determine the path ahead
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