This year, following a prolonged battle with inflation, high interest rates, and economic uncertainty, the likelihood of a recession in the US economy is rising. The potential severity of this downturn is weighing heavily on markets. However, all is not lost. There is still time to shape a different future!

Negative sentiment about an impending recession is fueled by the political and economic actions of US President Donald Trump, in particular massive tariffs, significant spending cuts, and widespread layoffs of federal employees. Markets see these measures as obstacles to economic growth in 2025.

Polymarket estimates that the odds of a recession in the United States this year have soared to 32%, up from 23% at the end of February. According to Torsten Slok, an economist at Apollo, the risk of a recession is growing not only in the US but also in the UK and Europe. The reason is the unpredictable actions of the US administration. "The biggest downside risk is that policy uncertainty could create a sudden stop in the economy where consumers stop buying cars, stop going to restaurants, and stop going on vacation, and companies stop hiring and stop doing capex," Slok said.

In addition, pressure on households has increased. As a result, consumer sentiment dropped in February to its lowest level since November 2023. TD Cowen President Jeffrey Solomon attributes this to Donald Trump's tariff policy, which could push the economy into a recession by the second half of the year. According to him, the risks to business activity are rising amid uncertainty surrounding the tariffs.

Currency strategists at BCA Research share this view, believing that the US economy could slip into a recession as early as the second quarter of this year, weighed down by weakening consumer activity. This gloomy outlook is supported by the Atlanta Fed, which predicts a 2.8% contraction in US GDP for the first quarter of 2025, down from a 4% gain expected at the start of the year.