Trade tensions have torn into the markets. With stocks sliding into correction territory in the last week, a question emerges: Is a recession next?
Traders on prediction markets — where people wager on such events as the likelihood of a recession — are increasingly betting on an economic downturn. Polymarket, for example, currently places the odds on a recession in 2025 at 40% — a sharp jump of nearly 20 percentage points in under a month.
Experts also see recessionary risks, citing trade tensions, policy uncertainty and sputtering consumer confidence. However, they caution that no single measure guarantees the future. A combination of metrics — including spending, jobs, business confidence — hint at what’s ahead. And experts note that signals aren’t red across the board: Job openings and household spending have held steady.
A recession is characterized as a widespread and significant decline in economic activity for multiple months. In the United States, a panel of experts at the nonprofit National Bureau of Economic Research makes the call.
Simple as it sounds, this committee typically takes months to officially declare a recession, as the factors that guide this decision can lag. While waiting, economists and other market watchers monitor several signals to gauge the health of the economy. Here are some of the numbers they consult, and what those figures now show:
Consumer behavior
Consumer spending represents approximately 70% of the country’s gross domestic product. Jeffrey Frankel, an economist at the Harvard Kennedy School and one of the experts who called recessions for the National Bureau of Economic Research, emphasized that consumer spending is one of the earliest and most direct indicators of economic downturn.
“Retail sales is like if you’re navigating through a foggy ocean, trying to see where the port is — the first rocks, the promise of the mainland as it comes into view — that’s retail sales,” Frankel said.
So far, data from…
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