The economy is flashing warning signs—and Trump’s tariff policy may be to blame
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We’ve seen recessions come and go, often preceded by subtle warning signs most people don’t notice until it's too late.
But lately, the signs are getting harder to ignore—especially when it comes to recent shifts in trade policy and what they might mean for your budget.
One of the biggest factors? The ripple effect of newly proposed tariffs—and how they might already be hitting Americans harder than they realize.
If you're on a fixed income, approaching retirement, or just trying to keep your grocery bill from ballooning, staying informed is more important than ever.
Let’s break down what’s happening in the economy, what experts are watching most closely, and what it might mean for you in the months ahead.
Leading Indicators Are Flashing Yellow
For economists, predicting a recession isn’t about gut feelings—it’s about cold, hard data.
One trusted tool is the Index of Leading Economic Indicators, published by the Conference Board. This index, which includes ten key measurements of economic health, has now declined three months in a row—a trend that often precedes a slowdown.
While that alone doesn’t confirm a recession, it does suggest the economy is heading into shakier territory.
Several of those indicators were already weakening before the latest tariff proposals were announced. Since then, the picture has become more complex—and more concerning.
Also read: Trump teases the possibility of another political decision–"I'm not done yet."
Stock Market Stumbles After Tariff Talk
One of the clearest signals has come from the stock market. The S&P 500—often viewed as a snapshot of overall investor confidence—plunged 6% in the two weeks following the announcement of proposed tariff hikes in early April.
When markets drop like this, it doesn’t just affect big portfolios. It also dents retirement accounts, reduces consumer spending, and shakes people’s financial confidence.
After all, when we feel less secure about our future, we tighten our wallets—and that can drag down the economy even further.
The Real Estate Rollercoaster
Real estate, another key piece of the economy, presents a more mixed picture. In many places, home prices remain solid, and evictions are even declining. But warning signs are still emerging.
Foreclosures are inching up in some regions, especially in parts of the Southwest, and more Americans are becoming “cost-burdened”—spending over 30% of their income on rent.
There are also signs that investor confidence in housing is eroding. A new survey among residential property investors recently dropped to its lowest level in two years.
Meanwhile, construction for office buildings has fallen sharply—another red flag for commercial real estate.
Job Numbers Are Stable—But For How Long?
National unemployment rates are holding steady—around 4.2%. But jobless rates aren't a leading indicator for predicting the direction of the economy.
That means they usually don’t rise until the economy has already begun to shrink. A more real-time measure, initial claims for unemployment insurance, showed a slight increase earlier this year.
It’s not a drastic change—but it could signal that some employers are starting to scale back. If the trend continues, layoffs could follow.
Credit Conditions and Interest Rates: Mixed Messages
The Conference Board also monitors credit and interest-rate movements, which play a major role in consumer and business behavior.
These indicators have recently sent mixed signals. On one hand, credit has remained available for now.
But with inflation expected to climb, partly due to tariffs, the Federal Reserve could face a dilemma—whether to lower rates to support the economy or keep them high to fight rising prices.
During past downturns, those with strong credit scores have been able to score better terms on loans or credit cards.
For example, one recent offer from a major issuer included 100,000 reward points for new customers—an incentive designed to attract cautious consumers in a more fragile economy.
Also read: Tariff plan paused—Trump steps back after market chaos shakes investors
Consumer Sentiment Is Dropping Fast
While economists look at the numbers, everyday Americans are feeling the pressure, too.
Consumer expectations are now one of the weakest components in the Conference Board’s index. And that’s just the start.
A separate survey from the University of Michigan, conducted in early April, showed a sharp drop in consumer confidence. Respondents expressed anxiety about everything from inflation and job loss to their own personal finances.
“Consumers report multiple warning signs that raise the risk of recession,” said Joanne Hsu, who directs the university’s consumer surveys.
Manufacturing Hours Holding—But Uncertainty Looms
One of the few bright spots in the leading indicators has been hours worked in manufacturing, which remain strong for now.
This may reflect early success in efforts to boost domestic production—one example being the expansion of semiconductor manufacturing in Arizona.
Still, as experts point out, these changes take time. It can take years to build new factories and scale up hiring.
And if broader economic demand slows, even increased production at home might not be enough to keep momentum going.
Also read: Harvard risks billions by refusing Trump administration’s latest move
New Business Orders: Tepid at Best
The Conference Board also tracks new orders for goods, which offer insight into future business activity.
The latest data shows a mixed bag—one index is flat, another slightly positive, and a third is weakening.
That kind of inconsistency reflects the caution many companies feel right now, especially with ongoing tariff policy changes creating an environment of uncertainty.
Bankruptcies and Budget Cautions on the Rise
Outside of official indicators, there are other troubling signs.
Bankruptcy inquiries have surged to their highest level since 2020, according to LegalShield. That doesn’t confirm a recession—but it does suggest that more Americans are worried about staying afloat.
And we’re seeing more anecdotal red flags, too. More liquidation sales. More homes lingering on the market. More shoppers pulling back.
These might not show up in every index—but for many of us, they’re hard to miss.
What’s Next for the Economy?
The next major update from the Conference Board is due April 29. If it shows a fourth consecutive month of decline, that would be another strong sign that we’re sliding closer to a recession.
Read next: "Liberation Day" shock: Discover the 2 surprising tariffs Trump just unveiled on April 2nd!
Are you noticing changes in your local economy? What steps are you taking to prepare? Let’s share insights and strategies in the comments below. After all, when we stay informed and connected, we’re better equipped to handle whatever comes our way.
But lately, the signs are getting harder to ignore—especially when it comes to recent shifts in trade policy and what they might mean for your budget.
One of the biggest factors? The ripple effect of newly proposed tariffs—and how they might already be hitting Americans harder than they realize.
If you're on a fixed income, approaching retirement, or just trying to keep your grocery bill from ballooning, staying informed is more important than ever.
Let’s break down what’s happening in the economy, what experts are watching most closely, and what it might mean for you in the months ahead.
The ripple effect of newly proposed tariffs might already be hitting Americans harder than they realize. Image source: WSJ News / YouTube
Leading Indicators Are Flashing Yellow
For economists, predicting a recession isn’t about gut feelings—it’s about cold, hard data.
One trusted tool is the Index of Leading Economic Indicators, published by the Conference Board. This index, which includes ten key measurements of economic health, has now declined three months in a row—a trend that often precedes a slowdown.
While that alone doesn’t confirm a recession, it does suggest the economy is heading into shakier territory.
Several of those indicators were already weakening before the latest tariff proposals were announced. Since then, the picture has become more complex—and more concerning.
Also read: Trump teases the possibility of another political decision–"I'm not done yet."
Stock Market Stumbles After Tariff Talk
One of the clearest signals has come from the stock market. The S&P 500—often viewed as a snapshot of overall investor confidence—plunged 6% in the two weeks following the announcement of proposed tariff hikes in early April.
When markets drop like this, it doesn’t just affect big portfolios. It also dents retirement accounts, reduces consumer spending, and shakes people’s financial confidence.
After all, when we feel less secure about our future, we tighten our wallets—and that can drag down the economy even further.
The Real Estate Rollercoaster
Real estate, another key piece of the economy, presents a more mixed picture. In many places, home prices remain solid, and evictions are even declining. But warning signs are still emerging.
Foreclosures are inching up in some regions, especially in parts of the Southwest, and more Americans are becoming “cost-burdened”—spending over 30% of their income on rent.
There are also signs that investor confidence in housing is eroding. A new survey among residential property investors recently dropped to its lowest level in two years.
Meanwhile, construction for office buildings has fallen sharply—another red flag for commercial real estate.
Job Numbers Are Stable—But For How Long?
National unemployment rates are holding steady—around 4.2%. But jobless rates aren't a leading indicator for predicting the direction of the economy.
That means they usually don’t rise until the economy has already begun to shrink. A more real-time measure, initial claims for unemployment insurance, showed a slight increase earlier this year.
It’s not a drastic change—but it could signal that some employers are starting to scale back. If the trend continues, layoffs could follow.
Credit Conditions and Interest Rates: Mixed Messages
The Conference Board also monitors credit and interest-rate movements, which play a major role in consumer and business behavior.
These indicators have recently sent mixed signals. On one hand, credit has remained available for now.
But with inflation expected to climb, partly due to tariffs, the Federal Reserve could face a dilemma—whether to lower rates to support the economy or keep them high to fight rising prices.
During past downturns, those with strong credit scores have been able to score better terms on loans or credit cards.
For example, one recent offer from a major issuer included 100,000 reward points for new customers—an incentive designed to attract cautious consumers in a more fragile economy.
Also read: Tariff plan paused—Trump steps back after market chaos shakes investors
Consumer Sentiment Is Dropping Fast
While economists look at the numbers, everyday Americans are feeling the pressure, too.
Consumer expectations are now one of the weakest components in the Conference Board’s index. And that’s just the start.
A separate survey from the University of Michigan, conducted in early April, showed a sharp drop in consumer confidence. Respondents expressed anxiety about everything from inflation and job loss to their own personal finances.
“Consumers report multiple warning signs that raise the risk of recession,” said Joanne Hsu, who directs the university’s consumer surveys.
Manufacturing Hours Holding—But Uncertainty Looms
One of the few bright spots in the leading indicators has been hours worked in manufacturing, which remain strong for now.
This may reflect early success in efforts to boost domestic production—one example being the expansion of semiconductor manufacturing in Arizona.
Still, as experts point out, these changes take time. It can take years to build new factories and scale up hiring.
And if broader economic demand slows, even increased production at home might not be enough to keep momentum going.
Also read: Harvard risks billions by refusing Trump administration’s latest move
New Business Orders: Tepid at Best
The Conference Board also tracks new orders for goods, which offer insight into future business activity.
The latest data shows a mixed bag—one index is flat, another slightly positive, and a third is weakening.
That kind of inconsistency reflects the caution many companies feel right now, especially with ongoing tariff policy changes creating an environment of uncertainty.
Bankruptcies and Budget Cautions on the Rise
Outside of official indicators, there are other troubling signs.
Bankruptcy inquiries have surged to their highest level since 2020, according to LegalShield. That doesn’t confirm a recession—but it does suggest that more Americans are worried about staying afloat.
And we’re seeing more anecdotal red flags, too. More liquidation sales. More homes lingering on the market. More shoppers pulling back.
These might not show up in every index—but for many of us, they’re hard to miss.
What’s Next for the Economy?
The next major update from the Conference Board is due April 29. If it shows a fourth consecutive month of decline, that would be another strong sign that we’re sliding closer to a recession.
Read next: "Liberation Day" shock: Discover the 2 surprising tariffs Trump just unveiled on April 2nd!
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