Is a US Recession Looming? 7 Charts Explain the Current State of the American Economy
US Economy: Possible Downturn Ahead?
A recession happens when an economy’s GDP decreases for two straight quarters. According to a recent SBI Research report, the long-term US GDP growth trend is dropping. Worries about the US economic outlook have surfaced due to Trump’s tariff policies and cuts in spending and jobs. Economists see Trump’s trade conflict as a risk to the American economy, which could result in higher consumer costs, slower economic growth, and fewer job opportunities.
“The trends suggest that the surge in the US economy post-COVID may have been an anomaly due to policy extravagance… Long trends indicate a possible downturn in the US economy,” says SBI in its latest report.
1. US Real GDP Growth Over Time
2. The Danger of Drastic Federal Spending Cuts
3. GDP Growth Path
The SBI report indicates that the US GDP growth path has been declining, especially since 2000. The US economy has weakened over the past year, with GDP growth falling from 3.2% in Q4 2023 to 2.5% in Q4 2024. The GDP Now model estimate from the Atlanta Fed for real GDP growth in the first quarter of 2025 is -2.4%.
4. Debt
5. Lower Exports and Consumption
The post-COVID US economic growth appears impressive, attributed to extensive policy measures. However, a more in-depth analysis suggests a likely decrease in US economic growth, along with reduced exports and consumption.
6. Savings to GDP Ratio
7. Stock Market Instability
The S&P 500 has lost its post-November election gains, with March 2025 expected to record the worst monthly performance since the COVID-19 period.
US Economy: Future Perspectives
The SBI report suggests that positive structural changes could potentially raise GDP trends. Despite modest productivity improvements, increased national savings could enhance potential GDP. Private sector re-engagement combined with technological advancements could improve growth prospects, though initial adaptation periods may pose challenges.
