In 2025, experts are predicting a significant slowdown in the U.S. economy, with growth estimated at only 0.8%, a sharp decline from the previous projection of 1.7%. This pessimistic outlook is fueled by escalating trade tensions, particularly due to President Donald Trump’s trade war initiatives. The 46 economists surveyed by Wolters Kluwer Blue Chip Economic Indicators now see a 47% chance of a recession, up from 25% just a month prior.

Despite a robust economy earlier in the year, economists point to the impact of tariffs on weakening economic activity and demand. The average tariff rate has risen substantially due to trade policies, with the effective U.S. tariff on all imports climbing to 30%, a significant increase from the pre-trade war levels of 2% to 3%. While some exemptions for certain electronics products have been announced, they are not expected to have a significant impact on averting a potential recession.

The overall consensus is that the economy is likely to slow down this year, with uncertainties surrounding tariffs leading to price increases that could dampen consumer spending, a crucial factor driving economic activity. Experts anticipate a mild recession in the latter half of the year, with GDP projected to decline by 1.5% and unemployment rates expected to peak at 4.7%.

The ongoing trade tensions and market volatility are contributing to reduced consumer sentiment, with inflation expectations reaching levels not seen since the 1980s. Despite the temporary pause on tariffs, the prevailing uncertainty is already impacting growth, highlighting the challenges facing the U.S. economy in the coming months.