Recession Fears Revealed by Trump’s Tariff Policy

Recession fears have resurfaced as a result of President Trump’s tariff policy, sending stocks plummeting and triggering fears that the economy may be on a downward slide. Adding fuel to the fire is the fact that foreign countries are raising their own tariffs on American-made goods, which could reduce demand and force companies to cut production and lay off workers.

But the evidence is mixed as to whether a recession is in the works. A real-time economic tracker compiled by the Atlanta Fed’s research team shows signs of a possible slowdown, but it doesn’t have the data to prove that a recession has begun or is imminent.

Other economic indicators also have sparked concerns, including declining consumer confidence and a rise in corporate bankruptcy filings. Historically, these have been early warning signs of a recession but recent readings haven’t been particularly strong.

While many economists believe that the US has not yet entered a recession, they are increasingly concerned about the risk of one in 2025. The odds of a recession occurring over the next 12 months have risen from 15% to 20%, according to Goldman Sachs.

Recessions typically happen when business investment declines, unemployment increases and consumers scale back spending. These negative effects tend to feed off of each other, encouraging more cutbacks and leading to a recession. That is why it is important to keep a healthy emergency fund and be prepared to spend less in a recession. You can do that by keeping a portion of your savings in cash or low-risk investments such as short-term bonds.