Rising Odds of Recession: What Economists Say About the 2025 Outlook

New York Stock Exchange trading floor with digital stock tickers displaying financial data related to recession prediction 2025.

Why Economists Warn of a Looming Recession

As 2025 approaches, several top economists are raising alarms about the increasing likelihood of a recession in the United States. The implications of ongoing tariffs and strained economic relations are being felt, with forecasts suggesting a substantial slowdown ahead.

Understanding the Risks

The term "recession" refers to a significant decline in economic activity, often indicated by two consecutive quarters of negative GDP. Currently, that risk hovers at an alarming 90%, according to Torsten Sløk, chief economist at Apollo Global Management. He emphasizes that the tariffs imposed, particularly on China, have not had the intended effect and could cripple small businesses, which are essential for job creation and capital investment.

The Potential for Stagflation

Adam Posen, president of the Peterson Institute for International Economics, echoes concerns for forthcoming stagflation—where persistent inflation coincides with very slow growth. He estimates a 65% chance that the U.S. economy may slide into recession, especially if inflation continues unabated. Posen is also critical of the government's readiness to tackle rising prices, making the financial outlook more precarious.

Indicators of Economic Health

Common signs indicating an economy on the brink of recession include falling GDP, increasing unemployment rates, and declining real income. Recent Bankrate surveys reflect that economists are increasingly aligning with these recession predictions, marking a significant shift in economic sentiment from just a few months prior.

What Should You Be Aware Of?

For small and medium business owners, these developments are particularly crucial. They must prepare for potential impacts from rising costs stemming from tariffs and inflated prices. Understanding economic indicators and consulting financial experts can be invaluable during uncertain times.

As we keep an eye on these economic trends, it would be wise for everyone, particularly those in industries reliant on stable market conditions, to strategize for the evolving economic landscape ahead.

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