The warning signs are increasing: In the past few days, more and more analysts have screwed up their forecasts for the probability that there will be a recession in the USA this year. What do you have to expect if this actually occurs?
• US recession for Trump’s customs policy increasingly more likely
• Consequences would not be limited to the USA
• Financial chaos inevitable on the stock exchange
After the “Liberation Day” in the United States and the new tariffs imposed by US President Donald Trump in the course of this in course, numerous experts see a higher probability for US recession. According to the JPmorgan experts, it is even 60 percent. According to “The Economic Times”, the US bank confirmed this assessment again on Wednesday after Donald Trump granted many countries a 90-day customs break. Accordingly, an economic downturn in the United States would now be more likely than avoiding it. But what would actually be expected in a recession in the United States?
Because of this starting point there is a US recession in the room
According to “Investing.com”, the economy market is currently hurrying by several months, so that there was initially a significant drop in price on the stock exchange before every major US recession. Currently, the stock markets worldwide are primarily characterized by high volatility, but the bottom line has clearly moved away from their recent records: the wide US index S&P 500 is currently at 5,268.05 points, for example, around 14.3 percent under his all-time high of 6,147.43 points, which he had only reached on February 19 (as of April 10, 2025).
More and more economic indicators also indicate that the US economy is entering a phase of weakening. For example, the ISM shopping manager index for industry and the ISM index for the service sector in the United States in March fell more than expected. While the latter still stayed just above the expansion threshold with 50.8 points, the ISM index for the US industry has already fallen under the growth threshold and thus signals a shrinkage of economic activity. Consumer confidence also showed weakness recently and fell to the lowest level of four years.
However, US President Trump’s policy could become the largest stress factor for the US economy. A number of new US criminal tariffs recently came into force on imports from China, the EU and other trading partners – only to be temporarily exposed to most countries shortly afterwards. Only for goods from China did the US President once again screw the import duties up. Officially, Trump wants to protect the domestic industry through the tariffs and bring back more production to the USA, but in practice they act like an additional tax on companies and consumers: Because higher import prices drive up the costs for US companies, are expected to be passed on as a price increase to US consumers and thus burden the purchasing power of households. This leads them to deeper corporate profits and a likely inflation.
At the same time, there is a risk of retaliation measures from abroad. China was the first country to impose against tariffs to US goods, while the EU has suspended it again for the time being, since in view of the paused US tariffs, a solution at the negotiating table is hoped for. If this does not come about and the EU and other countries have their counter -tariffs again, this would have the negative consequences for the American export industry. A technical recession in the USA, defined by two successive quarters with negative growth, would then become more and more likely.
Possible consequences of a US recession – nationally and global
If there is a recession in the largest economy in the world, this would probably have far -reaching consequences – also for the global economy. Because what happens in the USA rarely remains without effects on the rest of the world. According to the JPmorgan experts, a scenario is also conceivable in which the rest of the world somehow strike through a US recession, but that is not very likely.
In the United States, an economic downturn is likely to be reflected in falling corporate profits. Because in particular, the tariffs, which are far from completely out of the world despite the current developments, are likely to become a significant burden on US companies that continue to rely on imported goods or international suppliers. According to “The Economic Times”, the JPmorgan boss Jamie Dimon, especially the high tariffs against China, which still apply, are very concerned, because many US companies work with Chinese suppliers. In view of the punishment taxes, US companies either have the option of bearing the higher costs themselves or passing them on to consumers. Both should have a negative impact on their profit – in the first case directly and in the second case due to falling sales. Because the US consumer already suffering from high prices – Trump had actually started with the election promise to reduce prices – with their consumption, especially in the non -essential area in the event of further price increases.
Brake tracks are also likely to be noticeable on the labor market, because companies usually respond to falling profits and an economically challenging environment. Cyclical industries – such as industry or construction – are likely to suffer from declining order inputs. Corporate bankruptcies cannot be ruled out either. The result would be layoffs, stops and greater unemployment. This in turn would continue to dampen internal demand and consumption expenditure of consumers – a classic recessive feedback effect.
Internationally, a decline in demand in the USA is particularly likely to meet export -oriented economies – such as Germany, Japan or South Korea. The demand for machines, vehicles and electronics products could decrease noticeably – and thus also the corporate profits in these countries. Austerity measures, for example in the area of the number of employees, would also be the result here and would bring the consequences already mentioned.
A US recession would of course not pass the international financial markets without a trace. Historically speaking, stock markets are sensitive to declining corporate profits. Defensive sectors could be kept comparatively stable, while cyclical values and growth shares should be particularly under sales pressure. At the same time, a higher demand for safe ports such as gold would be expected.
These sectors are likely to suffer from a recession – and there could be opportunities here
However, not all industries are equally susceptible to a recession – but some traditionally come under particularly strong pressure. Cyclical and non-essential consumer goods such as cars, furniture, consumer electronics or luxury objects are likely to be one of the first editions that move consumers in uncertain times. Challenges could also face financial institutions, as there could be more credit losses, while the institutes are likely to drop due to higher demands due to higher requirements. Banks in particular that focused on financing commercial properties or medium -sized companies could stumbling.
The technology sector is also not immune to an economic downturn. Many big-tech companies are financially solidly established, but it is precisely growing, not yet profitable companies, with increasing risk aversion-both in the operational business and on the stock exchange.
But a recession could also offer opportunities for strategically thinking investors. Defensive industries such as healthcare, basic consumption goods or suppliers are traditionally considered stable in economically difficult times. Your products are always in demand – regardless of the economy. Long -term investors could also benefit from falling ratings and find an affordable opportunity to stock up on attractive entry courses with quality shares – true to the motto “Buy the DIP”. In addition, the central banks, especially the Federal Reserve, could react to a recession with monetary political loosening and thereby support the market. If the key interest rate is significantly reduced in the event of a recession, interest -sensitive sectors such as technology could revive in the medium term.
Editor finance.net
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