The prospect of a recession has become much more likely in recent weeks, ratcheting up political pressure on President Donald Trump and Republicans.
Most economic forecasters already expected the economy to cool in 2025, but Trump’s announcement of sweeping 10% tariffs on dozens of countries and much higher tariffs in others sent the markets into a spiral and caused economists to increase their recession odds.
Here is what a slowing economic environment or recession might look like, what is behind the shift, and how it fits into the political jigsaw.
What is a recession?
A recession is a pronounced economic downturn. The last recession was a very brief yet sharp downturn at the outset of the pandemic in 2020. Before that, the U.S. economy was in the Great Recession from 2007 to 2009.
There isn’t a single government agency that has the authority to declare a recession. Instead, those in government and most economists look to the National Bureau of Economic Research to declare one. The NBER is a private group that is seen as an authority on the matter.
Traditionally, many have labeled two consecutive quarters of negative economic growth as a recession. The NBER, though, defines a recession as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.”
Currently, GDP output has remained above water. The economy grew 2.8% in 2024, according to the government’s final estimate. Additionally, fourth-quarter GDP expanded at a 2.4% annual rate.
However, there are concerns for 2025. For instance, the Atlanta Federal Reserve’s “GDPNow” tracker predicts that GDP growth in the first quarter will be negative. Also, the Fed has recently suggested that GDP growth this year will be slower than previously expected.
What are the odds of a recession?
The odds of a recession are much higher than just a few months ago, according to economists.
JPMorgan Chase analysts put the chance of a global recession at 60% over the coming year if the tariffs are sustained. That is up from 40% before Trump announced the tariffs. CEO Jamie Dimon himself said the odds for a recession are 50:50.
Goldman Sachs also recently increased its projected odds of a recession from 20% to 45%.
Greg McBride, chief financial analyst at Bankrate, told the Washington Examiner that his firm conducts quarterly surveys of economists. The first quarter poll, conducted at the end of March, found that the odds of a recession had increased to 36% from 25% in the fourth quarter of last year.
“That was as of the end of March, so it’s safe to say the odds have gone up since then,” McBride said about the current economic landscape.
Half of the participants in a recent National Association for Business Economics survey put the odds of a recession this year at 25% to 49%; 37% of those surveyed thought there was a greater than 50% chance of a recession. Just 8% pegged recession odds at over 50% prior to Trump’s tariff announcement.
A monthly survey of more than 300 CEOs from industry group Chief Executive found that 63% forecasted a recession or other economic downturn in the next six months. That’s an increase from 48% in March who said the same.
Prediction markets have also weighed in, with Polymarket users pegging the odds of a recession in 2025 at 51%, down from a recent peak of 66%.
What is causing all of this?
The simple answer is tariffs and the uncertainty that has resulted from Trump’s tariff policies.
McBride pointed out that while the baseline forecast last year was that the economy was expected to slow in 2025, the tariff situation has worsened those projections.
“The tariffs and uncertainty around the tariffs has become a headwind to the economy, so that slower pace of growth that had been projected for this year is seen as being restrained significantly,” he said.
He also said that uncertainty is a headwind in itself because businesses might be hesitant to hire people, make new investments, or take risks.
Consumer sentiment has also soured, and consumers are anticipating higher inflation in the coming year.
The University of Michigan Consumer Sentiment Index for mid-April released last Friday found that year-ahead inflation expectations jumped from 5% last month to a concerning 6.7% this month. That is the highest reading since 1981, when the Great Inflation was finally winding down.
Consumer sentiment dropped nearly 11% over the month, falling for the fourth consecutive month. The sentiment reading was the second-lowest since 1952, surpassing a reading from the peak of inflation in June 2022.
There is some fear that souring economic sentiment could be self-fulfilling. If people expect that the economy is heading for a downturn or that inflation will worsen, they start acting and spending differently than they would have otherwise, which could exacerbate problems.
What does it mean for Trump and Republicans?
All of this is unwelcome news for Trump and the GOP.
Trump entered office vowing to drive down the inflation plaguing voters for most of the time that former President Joe Biden occupied the Oval Office. Trump’s message of being a better steward of the economy resonated with voters tired of price increases.
So, recent signs of souring sentiment and expectations of more inflation are certainly unwanted by the Trump administration. Still, it will argue that while there might be some pain in the short term, the tariffs will help voters by creating manufacturing jobs and resulting in an economic boom.
Peter Loge, director of the George Washington University School of Media and Public Affairs, said consumers are still fearful about the economy.
“Part of this is voters being really attuned to not the economy broadly but their weekly bills at the grocery store, the gas station, and you know, the voters are increasingly nervous about that,” he told the Washington Examiner.
Also, big swings in the stock market can hurt voters’ 401(k)s, an especially concerning scenario for older people who might be considering retirement.
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The rising odds of a recession also make congressional Republicans’ work to extend the 2017 Tax Cuts and Jobs Act more important. Most voters will see their taxes go up unless Congress restores many of the tax provisions before they expire next year, which is a midterm year.
Trump also has considerable sway over congressional Republicans, and the overwhelming majority have been willing to give him the benefit of the doubt on tariffs — at least for the time being. However, if there is a recession and voters blame Trump’s tariff agenda, that dynamic could shift heading into the midterm elections.
