Is a US recession coming? 7 charts that show the plight of the American economy

Is the US economy headed for a recession? A recession occurs when an economy’s GDP contracts for 2 consecutive quarters. A current SBI Research report says that the long run US GDP development exhibits a declining development.
Concerns have risen about the financial outlook of the US submit Trump’s tariff measures and chopping of spending and jobs. Economists view Trump’s commerce battle as a potential menace to the American economy, with potential penalties of elevated client prices, diminished financial development and diminished employment alternatives.
“The trends indicate that the jump in US economy post COVID may have been an outlier as a result of policy extravaganza…. Long trends indicate possible downturn in US economy,” says SBI in its newest report.

US Real GDP development in future

The report additionally cautions that, “the zealotry mission of departments like DOGE can undo a lot of ground works done in the previous decades, putting downward pressure on the beleaguered economy.” DOGE or the Department of Government Efficiency is an initiative of the US President Donald Trump and is headed by Tesla CEO and Trump advisor Elon Musk.

Drastically chopping Federal spending may be disastrous, says SBI report

The financial uncertainty looms giant, significantly noteworthy because it follows a interval when the US economy demonstrated outstanding power while managing the COVID pandemic disaster. So is the US economy headed for a recession? We take a take a look at some vital knowledge pointers in the SBI report on and the anticipated traits in the US economy based mostly on long-term historical past:
What US financial knowledge is pointing to
1) GDP development trajectory: Analysis of US GDP development reveals a downward trajectory, significantly evident since 2000, says the SBI report. America’s financial indicators recommend a discount in potential GDP, alongside weakening demand and funding patterns.

The US economy has weakened over the previous 12 months, with GDP development declining from 3.2% in This autumn 2023 to 2.5% in This autumn 2024, notes the SBI report.
“The GDP Now model estimate from Atlanta Fed for real GDP growth (seasonally adjusted annual rate, running estimate) in the first quarter of 2025 is -2.4% on 06 Mar, down from +2.9% on 31 Jan (first estimate),” says the report.
2) Debt: Rising nationwide debt ranges have change into more and more important, leading to diminished personal sector participation. Current commerce insurance policies involving tariffs are anticipated to create speedy challenges, with out substantial enchancment in GDP efficiency.

The debt to GDP ratio exhibits a secular rising development, says SBI.

3) Reduced exports, consumption: Post-COVID US financial development seems distinctive, attributed to intensive coverage measures. Extended evaluation suggests a possible decline in US financial development, accompanied by diminished exports and consumption.
4) Savings to GDP ratio: Total issue productiveness development is diminishing, whereas worth addition exhibits damaging development. Elevated wage ranges would possibly deter future investments. The savings-to-GDP ratio has reached its lowest level since 2011, marking the second-lowest determine since 1951.
January witnessed the first decline in client spending in almost 24 months, while the items commerce deficit reached unprecedented ranges as a consequence of companies accelerating imports to keep away from tariff implications, suggesting potential financial contraction this quarter. Consumer expenditure traits are anticipated to weaken in correlation with the projected general GDP slowdown.

US Consumer Spending Drop

5) Stock market mayhem: The S&P 500 has given up its post-November election positive aspects, with March 2025 projected to report the poorest month-to-month efficiency since the COVID-19 interval.

US markets, together with the S&P with a market capitalisation of roughly 52.9 trillion (February 2025), seem to have reached their limits after delivering distinctive returns. Investors are reassessing earnings forecasts amidst persistent volatility. The outstanding ‘magnificent 7’ shares show vulnerability following the Deep Seek occasion, with historically secure firms like Apple going through scrutiny of their safe-haven standing, says the SBI report.

P/E multiples are stretched for many markets

Investment flows are shifting in the direction of extra inexpensive markets as buyers search enhanced returns, evidenced by elevated exercise in mainland China and Hong Kong markets. Analysts anticipate potential corrections in overvalued markets. The ongoing sequence of reciprocal tariffs creates circumstances for elevated market instability in forthcoming intervals.
US economy: What’s the long-term outlook?
The SBI report says that optimistic structural changes may doubtlessly elevate GDP traits. Despite modest productiveness enhancements, elevated nationwide financial savings may improve potential GDP. Private sector re-engagement mixed with technological developments may increase development prospects, although preliminary adaptation intervals could current challenges. The SBI report notes the following: