When does a recession happen? A recession happens when the economy’s GDP contracts for two consecutive quarters. There are definitive criteria that must be met in order for the National Bureau of Economic Research (NBER), a nonprofit, nonpartisan research group, to determine a business cycle is recessionary.
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What has SBI said about US recession?
Concerns are growing about the US economic outlook following Trump’s tariff policies and reductions in spending and jobs. Economists warn that his trade conflicts could pose risks to the American economy, potentially leading to higher consumer costs, slower economic growth, and fewer employment opportunities. According to SBI’s latest report, “The surge in the US economy post-COVID may have been an anomaly driven by aggressive policy measures… Long-term trends suggest a potential economic downturn.”
The report also cautions that, “the zealotry mission of departments like DOGE can undo a lot of ground works done in the previous decades, putting downward pressure on the beleaguered economy.” DOGE or the Department of Government Efficiency is an initiative of the US President Donald Trump and is headed by Tesla CEO and Trump advisor Elon Musk.
Fears of a US recession this year are growing, in what is being called a “Trumpcession”, amid a sharp decline in business and consumer confidence as the president threatens punitive import tariffs on US allies and enemies alike. According to NBC News, traders on prediction markets — where people wager on such events as the likelihood of a recession — are increasingly betting on an economic downturn. Polymarket, for example, currently places the odds on a recession in 2025 at 40% — a sharp jump of nearly 20 percentage points in under a month.ALSO READ: ‘Don’t buy a Tesla’: World’s biggest Elon Musk protest with controversial sand image appears “There’s no one agreed-upon definition of a recession, but the most commonly used metric is two back-to-back periods of negative economic growth,” said CBS MoneyWatch correspondent Kelly O’Grady. “That would mean that we would see negative growth in U.S. gross domestic product or GDP, over two consecutive quarters.”
Notably, a financial quarter’s growth measure only becomes clear after it’s concluded, “so we wouldn’t officially know we’re in a recession until we were already in it,” O’Grady said.
How does one know recession is coming?
A rising unemployment, sharp decline in economic activity across sectors as consumers cut back on spending and business put a freeze on hiring, are general signs of recession. Since 1929, there have been 14 recessionary periods in the US. Most recently, the U.S. economy entered a brief, two-month long recession from February to April 2020, during the COVID-19 pandemic, as per CBS News.
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Despite a slight rise in US unemployment last month—from 4% to 4.1%—the rate remains historically low. Employers added 151,000 jobs in February, indicating continued hiring efforts. Retail sales also increased, though by less than expected. For now, economists say there are no immediate signs of a downturn.
“Right now, things feel uneasy due to significant policy uncertainty, federal layoffs, and weakening business, consumer, and investor sentiment,” Ryan Sweet, chief U.S. economist at Oxford Economics, told CBS MoneyWatch. “To some, it may feel like a recession, but we’re not there yet.”
Is stagflation on cards?
Some economists are sounding the alarm about a potentially more troubling scenario for the US economy: stagflation. This informal term—combining “stagnation” and “inflation”—describes periods of economic distress when growth slows while prices remain stubbornly high. Typically, inflation subsides when the economy contracts.
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The last time the US experienced stagflation was in the 1970s and early 1980s, when rising oil production costs drove inflation higher. As consumer spending declined, economic growth slowed, and unemployment rose.
“Stagflation is essentially an economic balancing challenge,” O’Grady explained. “When inflation is high, it signals excessive demand, so the federal government may raise interest rates to make borrowing more expensive and curb spending.”
How close are we to a recession?
For now, economic data suggests the risk of a recession remains low. The U.S. labor market continues to add jobs at a steady pace, and consumer spending remains resilient.
“The unemployment rate is slightly higher than a year ago, and inflation is about half a percentage point higher than last September,” O’Grady noted. “These may seem like minor shifts, but when combined with factors like declining consumer sentiment and spending—as well as the uncertainty of tariffs—there are warning signs of a weakening economy. However, we’re not at a crisis point yet.”
