The US economy may be heading towards a recession, signaled by various indicators. An inverted yield curve, where long-term interest rates fall below short-term rates, often precedes a downturn. Consumer confidence measures, such as the University of Michigan and Conference Board surveys, have shown significant declines, hinting at weakened household demand. Business confidence has also plummeted, both domestically and globally, due to trade uncertainties.

While professional forecasts indicate higher recession probabilities, prediction markets have tripled the odds of a recession following recent tariff actions. The Sahm rule recession indicator, which tracks unemployment rate increases, does not currently signal a recession. Early economic activity measures, like purchasing managers’ indices and retail sales data, provide further insight into the economic landscape.

Although a recession is typically defined by negative GDP growth over two consecutive quarters, real-time GDP estimates from nowcast indicators suggest a potential economic contraction. While these indicators are not foolproof, they serve as crucial navigational aids in the fog of economic uncertainty.

The National Bureau of Economic Research’s Business Cycle Dating Committee officially determines recessions based on a range of economic variables, with a declaration typically coming after the fact. As the economic outlook remains uncertain, experts estimate a high likelihood of a US recession within the next year, emphasizing the need for vigilance and preparedness in navigating potential economic challenges ahead.