President Donald Trump’s sweeping tariffs on imports have raised concerns about a possible recession, with stock markets seeing losses and companies feeling the pinch.
Trump has insisted that significant tariffs were the only way to shrink trade deficits and to help grow U.S. industries, including in the manufacturing sector, and says that temporary pain will be critical to long-term growth.
“I spoke to a lot of leaders, European, Asian, from all over the world,” Trump said aboard Air Force One. “They’re dying to make a deal. And I said, we’re not going to have deficits with your country. We’re not going to do that, because to me a deficit is a loss. We’re going to have surpluses or at worst, going to be breaking even.”
Democrats have been pledging to push back against the tariffs, and even some Republicans have expressed their concerns, calling for Congress to have a bigger role in shaping the key economic policy.
Sen. Ron Wyden told reporters that the tariffs were the equivalent of “economic poison” for numerous sectors in the economy.
“It is poison that is going to spread across the land,” he said, according to HuffPost.
Amid the grappling over whether the tariffs could help lead to a recession, here is what technically constitutes a “recession,” and information on the last time the United States experienced one.
What is a recession?
A recession can be defined as a “significant downturn in economic activity reflected in a decline in the growth of gross domestic product,” according to Mercer University. Dr. Antonio Saravia says the “conventional definition” of a recession is when there is negative growth in the GDP in two consecutive quarters.
Unemployment rates and payroll data can also be used to determine the start and end dates of a recession, according to economists.
The National Bureau of Economic Research also holds that significant declines in economic activity must be evaluated on their depth, diffusion and duration.
President Trump defends tariffs and market volatility
When was the last recession in the U.S.?
According to the National Bureau of Economic Research, the last recession that occurred in the United States was during the early days of the COVID pandemic in 2020, as businesses shuttered and millions of Americans were forced out of work.
The recession was notably short-lived, only lasting a matter of months, as the government pumped a massive infusion of money into the economy in the form of loans, grants and direct payments to workers.
Prior to COVID, the last recession had been the “Great Recession,” one of the worst economic downturns in modern history, lasting from 2007 to 2009.
The collapse of the U.S. housing market helped fuel that recession, with bank failures and a series of high-profile bailouts needed to pull the economy out of a tailspin, according to Britannica.
Experts react to instability and uncertainty within the market.
Will the U.S. see a recession?
According to the Atlanta Fed’s GDPNow tool, the latest estimate of GDP change is at negative-2.8% for the quarter, which is an improvement over the -3.7% forecast of a few days ago.
Still, it would mark the first quarterly decline in GDP since 2022 if it were to occur.
Concerns over the Trump administration’s tariff policies remain present in forecasts, along with corresponding impacts on consumer prices, inflation and employment numbers.
The Trump administration has insisted the current climate is a necessary correction, and Treasury Secretary Scott Bessent told NBC News there was “no reason that we have to price in a recession” for economic forecasts.
“Who knows how the market is going to react in a day, in a week? What we are looking at is building the long-term economic fundamentals for prosperity, and I think the previous administration had put us on the course toward financial calamity,” he said.
Still, many experts are raising alarms. BBC’s business editor Simon Jack said the drop of copper and oil prices by more than 15%, along with other commodities, could be a sign of trouble ahead. He also pointed to downturns in the banking sector, another possible indicator of a recession.
According to CNBC, 69% of CEOs surveyed said they expect a recession. Most do expect it to be “moderate or mild,” but still believe there will be contraction in the economy.
JPMorgan also raised their forecasted odds of a recession to 60%.