US economic recession 2025: Are we going to the US recession? All your key questions have been answered
The move has not boosted the economic outlook despite President Donald Trump’s sudden decision to suspend 90 days of mutual tariffs. The ongoing trade war with China, China’s largest trading partner, continues to escalate, further weakening business confidence.
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As Trump tariffs intensify global trade and India maintains strong ties with the United States and China, a potential recession in the United States may at least weaken India’s growth rate. But what are economists and investors’ comments on this. Here are the key things you need to know:
Is the United States a recession on the card?
According to TOI, some economic indicators indicate that the United States may be on the verge of a recession. The Leading Economic Index (LEI) of the General Assembly Committee has declined in the past 15 months, indicating a significant slowdown in growth. A Reuters poll of economists puts the probability of a U.S. recession in the next year at 45%, the highest since December 2023. Driving this prospect is factors such as new tariffs, such as new tariffs, which are expected to increase GDP by 0.8 percentage points in 2025, as well as weaker business sentiment and reduced business discounts and scalable capital investment plans.
Mark Zandi of Moody’s Analytics also puts the chances of a recession by 40% by the end of 2025, citing tariffs and strict credit standards as key issues. The John author of Bloomberg warns that the risk of policy errors has increased, reminiscent of the 2008 financial crisis. Ray Dalio, founder of Bridgewater Associates, said the U.S. was “very close to a recession”, warning that improper tariffs could lead to more serious economic consequences.Please read also: Trump ousted the IRS chief a few days after a dispute over appointing Elon Musk and Scott Bessent
How many recessions have we seen since 2000?
The United States has experienced several recessions since 2000. The reciprocity rate in 2001 lasted for eight months, with an unemployment rate of 5.7%. The Great Depression began in December 2007 and lasted for 18 months, with a massive contraction of GDP at 4.0% and an unemployment rate of 10%. The shared recession in the early 2020s was clearly short-lived, lasting only two months, but GDP fell 19.2% in the second quarter and the unemployment rate soared to 14.7%.
How do you define recession?
According to the National Bureau of Economic Research (NBER), the sharp decline in economic activity spread throughout the entire economy has lasted for more than a few months. Determine based on depth, diffusion and duration.
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If we fall into recession, what will its global impact be?
The U.S. recession could have profound impacts on the global economy, especially when it coincides with other systemic financial shocks or external events such as pandemics. Otherwise, the overflow will be milder.
Historical data show that despite slowing trade, the U.S. recession in 2001 did not lead to a global recession, as world GDP still managed to grow by 2.5%. By contrast, the 2007-2009 financial crisis triggered the first global contraction since World War II, with world GDP shrinking by about 1.3% in 2009. The Covid-19-19 pandemic caused a uniform decline, with global GDP falling by about 3%, the steepest decline since 1945.
The deep interconnection of global markets means that the U.S. recession can reduce demand for imports, affecting countries that rely on U.S. trade. However, the severity of these effects depends on the nature of the recession and the resilience of other economies.
Comparing the recession in the United States, India and China
The recession in India and China is very different from that in the United States. The main shocks in the United States are often caused by financial cycles and consumer credit issues, while India faces supply-side shocks and external capital flow challenges. In India, informal employment constitutes a large part of the workforce, limiting the impact of social security measures during the downturn.
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The U.S. has typically seen a sharp rise in unemployment during the recession, but benefits have helped alleviate the financial blow for many workers. In contrast, unemployment in India often restores workers to the agricultural or informal sector, exacerbating underemployment rather than simply increasing the unemployment rate.
In addition, while the U.S. recession can tighten global financial conditions, India’s economic recession mainly affects regional trade and commodity demand, with limited financial contagion caused by capital controls.
As the U.S. economy sails through these uncertain waters, its impact on domestic and international markets remains a concern for economists and policy makers.
