Economists reveal: Is the US on the brink of a recession? See if finances are at risk
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The word "recession" can be unsettling.
It brings to mind economic downturns, job losses, and rising prices—factors that can affect everyone, particularly those on a fixed income.
Lately, discussions about whether the US is heading into one have intensified, leaving many Americans to wonder: Is there real cause for concern?
And more importantly, what steps can be taken to safeguard financial stability?
Before examining the current economic outlook, it's important to understand what defines a recession.
In simple terms, a recession is a sustained period of economic decline, often characterized by reduced GDP, rising unemployment, and weakened consumer spending.
Contrary to popular belief, a recession isn't determined solely by two consecutive quarters of negative GDP growth.
The National Bureau of Economic Research (NBER), the organization responsible for officially identifying recessions in the US, also considers the severity of economic decline, the number of industries affected, and the duration of the slowdown.
Right now, economic indicators are painting a mixed picture, but the data suggests a recession is unlikely—for now.
While job growth remains steady and key data suggest the economy has not yet entered a recession, other signs point to potential trouble ahead.
Julia Pollack, chief economist at ZipRecruiter, highlights that four out of the six key indicators monitored by the NBER suggest the economy is still growing.
Consumer confidence has declined, retail spending has softened, and ongoing policy uncertainties have led to hesitation among businesses and investors.
Though economists are not currently declaring a recession, some warning signs suggest that the situation could shift.
A slowdown in hiring, an increase in layoffs, or further dips in consumer spending could be early indicators of economic trouble.
Ryan Sweet, chief US economist at Oxford Economics, told CBS MoneyWatch that the economy isn’t in a recession yet, though it may feel that way to some.
"Right now, things feel uncomfortable given the significant amount of policy uncertainty, the federal layoffs, and we've seen business, consumer and investor sentiment fray," he explained.
One of the strongest indicators of an economic downturn is a rise in unemployment.
When businesses reduce hiring or lay off workers, consumer spending weakens, leading to a cycle of economic contraction.
If this trend becomes widespread, it could signal a more serious downturn.
Pollack emphasized the importance of consumer spending in maintaining economic stability, noting that recent trends are cause for concern.
"Negative consumption is concerning because consumer spending is the backbone of the US economy," she said.
"And it's not just that spending fell. Sentiment has fallen, household budgets are squeezed, and consumers are more vulnerable to shocks, which has heightened recession fears."
For now, unemployment remains relatively low, and weekly jobless claims have stayed stable.
However, economic conditions can change quickly, making it essential to monitor financial trends closely.
Recessions do not impact everyone equally.
Industries that rely on discretionary spending, such as hospitality and retail, tend to be hit hardest.
Additionally, individuals with significant debt—especially homeowners struggling with mortgage payments—may face financial challenges.
Alex Jacquez, chief of policy and advocacy at the Groundwork Collective, emphasized that economic downturns disproportionately affect lower-wage, Black, and Latino workers, who are often the first to face job losses.
For retirees or those on fixed incomes, economic downturns can raise concerns about rising costs, fluctuations in investments, and overall financial stability.
Taking proactive steps can help minimize the impact of economic uncertainty.
While predicting economic shifts is impossible, taking precautionary measures can help strengthen financial security:
While a recession is not a certainty, economic uncertainty remains a concern. Understanding the signs of a downturn and taking steps to strengthen financial security can help individuals navigate potential challenges.
Read next: Alert: The FDA has issued its highest recall alert for this popular Costco item
What financial strategies have been most effective in preparing for economic changes? Share thoughts and experiences in the comments—staying informed and prepared is the best way to face any financial uncertainty.
It brings to mind economic downturns, job losses, and rising prices—factors that can affect everyone, particularly those on a fixed income.
Lately, discussions about whether the US is heading into one have intensified, leaving many Americans to wonder: Is there real cause for concern?
And more importantly, what steps can be taken to safeguard financial stability?
Before examining the current economic outlook, it's important to understand what defines a recession.
In simple terms, a recession is a sustained period of economic decline, often characterized by reduced GDP, rising unemployment, and weakened consumer spending.
Contrary to popular belief, a recession isn't determined solely by two consecutive quarters of negative GDP growth.
The National Bureau of Economic Research (NBER), the organization responsible for officially identifying recessions in the US, also considers the severity of economic decline, the number of industries affected, and the duration of the slowdown.
Economists weigh in on whether the US is heading toward a recession and what it could mean for everyday Americans. Image Source: Pexels / Photo By: Kaboompics.com.
Is the US economy on unstable ground?
Right now, economic indicators are painting a mixed picture, but the data suggests a recession is unlikely—for now.
While job growth remains steady and key data suggest the economy has not yet entered a recession, other signs point to potential trouble ahead.
Julia Pollack, chief economist at ZipRecruiter, highlights that four out of the six key indicators monitored by the NBER suggest the economy is still growing.
Consumer confidence has declined, retail spending has softened, and ongoing policy uncertainties have led to hesitation among businesses and investors.
Though economists are not currently declaring a recession, some warning signs suggest that the situation could shift.
A slowdown in hiring, an increase in layoffs, or further dips in consumer spending could be early indicators of economic trouble.
Ryan Sweet, chief US economist at Oxford Economics, told CBS MoneyWatch that the economy isn’t in a recession yet, though it may feel that way to some.
"Right now, things feel uncomfortable given the significant amount of policy uncertainty, the federal layoffs, and we've seen business, consumer and investor sentiment fray," he explained.
Also read: Be prepared: The unexpected sign of a looming recession—spotted in unexpected places!
What could push the economy into a recession?
One of the strongest indicators of an economic downturn is a rise in unemployment.
When businesses reduce hiring or lay off workers, consumer spending weakens, leading to a cycle of economic contraction.
If this trend becomes widespread, it could signal a more serious downturn.
Pollack emphasized the importance of consumer spending in maintaining economic stability, noting that recent trends are cause for concern.
Rising unemployment raises concerns about the state of the US economy and its potential impact on workers. Image Source: Pexels / Anna Shvets.
"Negative consumption is concerning because consumer spending is the backbone of the US economy," she said.
"And it's not just that spending fell. Sentiment has fallen, household budgets are squeezed, and consumers are more vulnerable to shocks, which has heightened recession fears."
For now, unemployment remains relatively low, and weekly jobless claims have stayed stable.
However, economic conditions can change quickly, making it essential to monitor financial trends closely.
Also read: The complicated reality behind America's falling birth rate—should we be worried?
Who would be most affected?
Recessions do not impact everyone equally.
Industries that rely on discretionary spending, such as hospitality and retail, tend to be hit hardest.
Additionally, individuals with significant debt—especially homeowners struggling with mortgage payments—may face financial challenges.
Alex Jacquez, chief of policy and advocacy at the Groundwork Collective, emphasized that economic downturns disproportionately affect lower-wage, Black, and Latino workers, who are often the first to face job losses.
For retirees or those on fixed incomes, economic downturns can raise concerns about rising costs, fluctuations in investments, and overall financial stability.
Taking proactive steps can help minimize the impact of economic uncertainty.
Also read: The real cost of tariffs—why prices keep climbing
How to protect finances in uncertain times
While predicting economic shifts is impossible, taking precautionary measures can help strengthen financial security:
- Build an emergency fund – Setting aside three to six months’ worth of expenses can provide a financial cushion.
- Diversify investments – A well-balanced portfolio can help manage market fluctuations.
- Reduce high-interest debt – Paying down outstanding balances can prevent financial strain during economic downturns.
- Stay informed – Monitoring economic trends can help in making well-informed financial decisions.
While a recession is not a certainty, economic uncertainty remains a concern. Understanding the signs of a downturn and taking steps to strengthen financial security can help individuals navigate potential challenges.
Read next: Alert: The FDA has issued its highest recall alert for this popular Costco item
What financial strategies have been most effective in preparing for economic changes? Share thoughts and experiences in the comments—staying informed and prepared is the best way to face any financial uncertainty.
