Recessions are always officially declared after they have already begun.
In the United States, the National Office of Economic Research (NBER), the official referee of what constitutes a recession, taking into account different economic indicators, including growth. The organization Define a recession As a “significant decrease in economic activity that extends through the economy”, it usually lasts more than a few months, but not always.
The great recession technically begged in December 2007 after the world financial accident, but the Nber did not recognize it as such until the next December. The Covid-19S-19 recession less than three Monds, as of February 2020, but was not declared until June.
So, is it possible that the United States already has a recession caused by the tariffs of President Donald Trump, but we still don’t know?
Economists say it is possible, and are looking for signs that go beyond substantial negative economic growth, which can only be seen in retrospect.
That is important for Americans who make daily financial decisions, as well as companies that plan a potentially rocky quarter with the implementation of Trump’s rates.
“Whether there are two or three months from now on, we are looking back and saying:” Was the United States in a recession or not? “It will be a really important question,” said Michael Madowitz, the main economist of the Roosevelt Institute, a group of progressive economic experts. “But also, it is totally reasonable to be like,” I don’t need to wait for those answers to understand if my local economy is getting worse. “
Here are three indicators that economists are observing.
1. Consumer confidence is decreasing
If the US is an experimental recession, it would be different from the recesses of the recent ones. This time, said Madowitz, would be a direct result that Trump’s rate reduces consumers’ demand. In general, external factors first affect companies and are then reduced to consumers. (He thought that the COVID-19 recession was also exceptional in this regard).
“In general, we think things go on the corporate side down and listen to the consumer,” said Madowitz. “In this case, it is almost the opposite. It is 100 percent from the consumer’s side, because we are hammering the consumer side.”
As consumers anticipate higher prices due to rates, it showed a monthly survey at Michigan University The feeling of the consumer decreased 11 percent in April to 50.8 lower than the great recession or deceive the COVID-19 pandemic.
“You are seeing that retail sales begin to really weaken, and that will get worse as Patan tariffs,” said Harry Holzer, a labor economist at Georgetown University and a member of the Brookings institution.
From there, Holzer said he expects cascade effects: companies could respond to lower demand for consumers and higher costs with payroll layoffs. That could lead to inemplenting and leave Americans with even less money to spend.
2. The bond market is showing a warning signal
Before Trump backed up some of his tariffs last week, Treasury yields of the United States They were peaks. That was a red flag that investors were losing confidence in the force of the US economy and the US dollar.
“Usually, when markets expect a long -term recession [Treasury] Interest rates decreased, but they shot last week because it is now beginning to affect confidence in the dollar, “said Holzer.
Treasury yields have remained volatile In the days passed and it is not likely to recover completely in the short term, even if Trump retires beyond tariffs. That is because “Completely deceived” understanding of economics and history.
As a result, investors question whether it is worth running the risk of sinking more money in the US market. That uncertainty will not disappear soon.
3. Gasoline prices are going down, and probably not for a good reason
While many Americans because gasoline prices fall, the fact that they go to less than $ 3 per gallon may not be a good sign. Rather, it could be an indicator that the “global economy goes south quickly,” said Madowitz.
He Average gas price in the US. It costs around $ 3.02 per gallon as of Monday, the lowest in years. He The White House has argued That Trump is providing very necessary economic relief to American families as a result.
But it is worth investigating why gasoline prices are falling so fast. It is not for Trump’s energy policies; Historical, the drops of drops has been associated with Lower economic activityIf not an absolute recession.
“This is not Covid, when oil prices went down because people did not travel,” said Madowitz. “This is that oil prices go down because people say,” this looks really bad for growth everywhere. “
