What is a recession, and is the U.S. economy heading for one? Here’s what economists say.

President Trump’s recent comments on the possibility of a U.S. recession have sparked concerns among economists and the public. In an interview on Fox News, President Trump declined to rule out the possibility of a recession, stating, “I hate to predict things like that. There is a period of transition because what we’re doing is very big.” U.S. Commerce Secretary Howard Lutnick also seemed to leave the door open for a downturn, mentioning in an interview with CBS News that Mr. Trump’s economic policies are “worth it” even if they lead to a recession.

Understanding what constitutes a recession is crucial in assessing the current economic situation. The National Bureau of Economic Research (NBER) identifies a recession as a broad-based, persistent decline in economic activity. While the popular metric is two consecutive quarters of negative economic growth, NBER evaluates six key indicators to determine if the economy has entered a recession. These indicators include real personal income, non-farm payroll employment, personal consumption, manufacturing and trade sales, and industrial production. The depth, breadth, and duration of the decline in economic activity are essential factors in defining a recession.

Despite concerns raised by President Trump and Commerce Secretary Lutnick, current economic data do not suggest an imminent recession. While layoffs are increasing, the U.S. labor market continues to create jobs at a steady pace. Four out of the six signals tracked by NBER point to continued economic expansion, according to Julia Pollack, chief economist at ZipRecruiter. However, there are signs of potential trouble on the horizon. Retail spending has been waning, consumer confidence is deteriorating, and investor concerns about trade policies have impacted stock prices.

One of the clearest signals of an impending recession would be a steady increase in job losses and a rise in unemployment. While the nation’s unemployment rate recently ticked up to 4.1%, employers added 151,000 jobs, indicating ongoing hiring efforts. Weekly jobless claims remain low, suggesting that layoffs are not worsening significantly.

In a recession, the most vulnerable individuals are typically those who entered the labor market last, including lower-wage workers, black workers, and Latino workers. Americans carrying debt on their homes may face foreclosure, further exacerbating economic challenges. Recessions disproportionately impact the most vulnerable populations, hindering their ability to build household wealth and financial stability.

As the debate over the likelihood of a recession continues, it is essential to monitor economic indicators closely and remain prepared for potential economic challenges. While the current economic data do not point definitively towards a recession, ongoing uncertainties surrounding trade policies and fiscal measures could impact the economy in the future. Stay informed and stay vigilant in navigating the ever-changing economic landscape.