How Worried Should You Actually Be About a Recession? | Global News Avenue

The stock market sell-off this week kept the recession chatting, but that doesn’t necessarily mean it’s coming.

Of course, a full-scale recession is possible, and it seems easier after this week, especially if more cautious American consumers decline and prompt employers to dictate employees. But, according to several economists and market analysts, the more likely situation now appears to be weaker growth. Instead of firing at all cylinders, the U.S. economy is rising at a bland pace, which is not good news, but far from a panic signal.

“We think the economy will avoid falling into recession,” Wells Fargo economists wrote in a study note, noting that “healthy fundamentals,” such as a healthy household balance sheet as a buffer.

Even so, they noted that the economy has “lost some momentum in early 2025”, coupled with tariff uncertainty and federal cuts, could cause losses.

How should you view the selling in the stock market?

Stocks have not recovered from Monday’s plunge. Investor dumping of technology stocks has put the technology heavy-duty Nasdaq Composite index below its most recent February peak of more than 13%. S&P 500 Index Officially correct On Thursday, the index fell 10% from its peak.

The sharp decline in the stock market is “the wealthy spends more slowly and drives household consumption slower”, Joe Brusuelas, chief economist at accounting firm RSM US LLP. When the stock market rises, Wealth effect Making high-income families feel richer and therefore spend more, thus promoting the rest of the economy.

Brusuelas said lower stock prices have the opposite effect, and wealthier households are likely to reduce spending this quarter. However, the U.S. economy can absorb some slowdowns without entering a contraction.

“The current growth panic is being exaggerated,” Brusuelas said. “What I feel here: We’re just seeing a classic late-cycle business slowdown.”

He expects economic growth to be 1.5% this quarter, weakening from a rate of 2.5% or higher in the past few years. But that’s not unusual, he said, noting that in early 2022, growth fell into negative territory before continuing to take power.

Tariffs could make the recession bigger

The economy is also at risk for next month as President Donald Trump weighs on tariffs from Canada and Mexico and imposes new reciprocity tariffs on goods around the world.

“If there are other tariffs, then we may need to take a step back and reassess the forecast for growth and consumption,” Brusuelas said, adding that “waiting is the hardest part”.

Treasury Secretary Scott Bessent told CNBC on Thursday that he was “not worried about three weeks of volatility.” He said the government’s focus is to improve the “real economy” in the long run.

Satyam Panday, chief U.S. and Canadian economist at Standard & Poor’s Global Rating, believes that there is a 25% chance of a recession in the United States due to uncertainty bites.

“The growing risk is that tariffs, slowing down immigration growth trends and restrictions on the federal government’s labor force will create a lasting negative feedback loop, and supply-side shocks will lead to supply-side shocks,” Panday wrote in a research note.

Latest work report Show us that employers added 151,000 jobs In February, the unemployment rate remained at a low of 4.1%. But analysts and investors are increasingly throwing the data they see as dating aside and looking forward to whether they will deteriorate anytime soon.

Slower spending may be a real problem

In recent surveys, consumers have Say they are not very confident About the road ahead. Company is not waiting American Eagles Costume arrive Delta gas line The spending momentum marked declined.

After Trump was elected, the CEO was very optimistic, which caused hope for a boom in the company’s investment, but this seemed to ease. The business roundtable said in its quarterly survey that its CEO’s economic outlook index rose to 84 levels last year after Trump’s victory in November.

“The findings show that our members are cautious about members in the next six months, but also see opportunities for improved growth,” said Chuck Robbins, Cisco CEO and Chairman of the Business Roundtable.

Another survey of economists at the American Bankers Association also cites the rise in downside risks, but GDP is expected to grow at 2.1% in 2025 and 2026. The group believes there is a 30% chance of recession this year and the next.

“The consensus forecast for positive economic growth and low recession risks is based on expectations that new tariffs will not remain in 2025,” said Luke Tilley, chief economist at M&T Bank in New York and chair of the ABA’s advisory panel of economists. “The longer the tariffs last, the more risk of recession.”