What is a recession and are we heading for one?

Stock Markets Plunge as Recession Fears Grow

By CHRISTOPHER RUGABER, AP Economics Writer

WASHINGTON (AP) — In a sudden turn of events, stock markets are plummeting, consumer and business confidence is waning, and economists are revising their growth projections downwards, with some even speculating about the likelihood of a recession.

This stark shift comes after a period just a month ago when stock indices were hitting record highs and consumer sentiment was on the rise. Business leaders were hopeful that President Donald Trump’s tax cuts and deregulation efforts would fuel economic expansion.

However, the scenario has changed drastically as Trump has aggressively imposed tariffs and threats against major trading partners. The recent decision to double import taxes on steel and aluminum from Canada has further escalated tensions.

Despite the current stability of the economy, concerns about a potential downturn are mounting. The impact of tariffs on consumer prices, business investments, and overall uncertainty is causing apprehension among investors and analysts.

While the likelihood of a recession is still considered low by many, the prolonged imposition of tariffs could significantly increase the risk, according to experts.

Here are some key questions and answers regarding the current economic situation:

Is a recession imminent?

There are no concrete signs pointing to an imminent recession. However, recent data from the Federal Reserve’s Atlanta branch indicating a potential decline in the economy has raised concerns. Most economists still anticipate growth in the first quarter, albeit at a slower pace than before.

What factors contributed to the stock market decline?

President Trump’s remarks about the possibility of a recession during a recent interview ignited the market sell-off. While some of his advisors downplay recession fears, uncertainty persists regarding the economy’s direction.

Why are Trump’s tariffs causing more alarm this time?

The broad scope of the import taxes proposed by Trump, targeting multiple countries and industries, has heightened concerns compared to previous tariff measures. Economists warn that the current tariffs could have a more significant impact on the economy than previous actions.

What are the indicators of a recession?

A sustained increase in job losses and a spike in unemployment rates are clear signals of a recession. While there has been a slight uptick in unemployment recently, job creation remains relatively stable.

Who determines the start of a recession?

The National Bureau of Economic Research officially declares recessions based on a range of economic indicators. While the organization typically confirms a recession after it has begun, the process can take time.

Originally Published: March 11, 2025 at 11:54 AM MDT