What are the odds of an economic recession?

Over the past few weeks, due to an extremely volatile news cycle, many investors and consumers believe that the U.S. economy may fall into a recession. But are these suspicions actually valid?

President Donald Trump, with 100 dollar bills as the background.

The president, Donald Trump, was waged war entirely with the economy and investors due to his waging of trade wars as a result of his tariff policies. Pompously labeling it as "Liberation Day," the president implemented a large wave of "reciprocal tariffs" on nations that supposedly enact high tariffs on American products, but many of these rates have been proven to be inflated or outright misleading, as the United States actually benefits through cheaper trade goods with its greatest trading partners, like Taiwanese semiconductors and South American lumber.

These policies have lead to a massive dip in the stock market as investors hope to retreat their equity from the likes of stocks. Believing that these tariffs would lead to an economic shortfall, they justified their selling off in a great wave, which resulted in some of the worst days for the stock market since 2020; the Nasdaq and S&P 500 index funds alike both sank by more than 5% for several days in a row, while the Dow fell by a smaller but still large amount.

But, it is important to actually analyze the economic situation and determine whether or not an actual recession is inevitable. Some economists may say yes. JPMorgan Chase, one of the most trusted analysts of the market, as upped their probability of a recession to 60%, thus anticipating a recession to occur this year. Other analysts have also cited significant percentage likelihoods like this for a recession over the next year. Also, the largest dips occurred recently which many connected to the 1929 Wall Street Stock Market Crash, the lockdown-era shortfall of March 2020, and the collapse of Lehman Brothers in 2008.

However, some of these recession threats have been far to exaggerated. Although there is fear that the economy will dip, and several breaking news like reciprocal tariffs will indeed threaten the stability of the economy, keep in mind that the United States has many mechanisms to prevent a recession. The economic superiority of the nation is still strong, inflation has been slowing (so far), and the valuation of the U.S. dollar is amongst the strongest currencies in the world due to very high interest rates and its status as the global reserve currency.

So, although recession fears are warranted in a turbulent time like this, ultimately many of these recession fears are exaggerated.