By the end of the trading day Tuesday, the Dow, S&P 500 and Nasdaq Composite had all fallen following a tumultuous day. This did little to reduce fears that a recession is looming.
What CNN described as a “roller coaster ride” on Tuesday was preceded by a market nosedive on Monday. Experts have pointed to fear and uncertainty associated with President Donald Trump’s tariff war with U.S. trade partners Canada, Mexico and China as the cause.
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In this uncertain time, here are four things to know.
1. What a recession is
American adults likely remember living through the “Great Recession” from 2008 and 2009. The term now carries memories of falling home prices, high unemployment rates and financial instability from that era, and continued financial struggles following it.
According to the International Monetary Fund, there is actually no official definition of a recession. However, it said “there is a general recognition that the term refers to a period of decline in economic activity.”
What it does not refer to are short periods of economic decline.
2. What can signal a recession
“There are a variety of reasons recessions take place. Some are associated with sharp changes in the prices of the inputs used in producing goods and services,” the International Monetary Fund said. “For example, a sharp increase in oil prices can be a harbinger of a coming recession.”
Right now, people are concerned that the president’s tariff policies signal the start of a longer-lasting trade war, disruptions in prices and ultimately, an impending recession.
However, two experts who spoke to Audacy this week don’t think a recession is imminent.
3. Experts don’t think we should be worried
“There is nothing that suggests that a recession is on the horizon,” Craig Rappaport of Rappaport Wealth Management told Audacy.
Brian Belski of BMO Capital Markets also said that it’s too early to be talking about a recession.
“The market was up 23 % in 2023 and 28 % or so last year,” Belski said. “Some of this is relatively normal in terms of the market pulling back, but there’s no doubt that when we don’t know or we don’t have a handle on what’s going on that causes fear and so fear is obviously hitting an extreme.”
Uncertainty and fear increased this week when Trump “declined to explicitly rule out a full-blown recession for the U.S. economy this year,” and told Fox Business’ Maria Bartiromo in a recent interview that the country will see a “period of transition” as his policies take effect.
Belski also noted that “historically, the first quarter of the new presidency following two big years up –you typically have this type of pullback.” He noted that March has often been a tough month for markets in recent years.
As we noted previously, current recession fears are centered around tariffs.
“And now you’re starting to hear the R word meaning recession, which I think is not appropriate, especially given we’re still at four percent unemployment, we’re still at positive earnings, we're still a lot of great things that are happening in the economy,” he said. “This is an emotional reaction to not knowing what’s going on.”
In fact, he still predicts that the Federal Reserve Bank will lower interest rates later this year. Belski also noted that American consumers still appear to be strong, though millennials and Gen Z tend to spend on experiential things such as travel, a break from traditional spending habits.
4. What about inflation?
Experts might not be worried about a recession, but market volatility and continued inflation can have an impact on finances for Americans. This week, a new inflation report is set to come out amid headlines about high egg prices.
CBS News reported Tuesday that this report covering February is likely to show an increase in inflation.
“Prices across the U.S. likely rose 2.9% last month from a year ago, which would remain well above the Federal Reserve's target of a 2% annual rate, according to the average estimate from economists polled by FactSet,” said the outlet. “The CPI, a basket of goods and services typically bought by consumers that tracks the change in those prices over time, has cooled considerably from its peak of 9.1% in June 2022, but continues to eclipse the index’s pre-pandemic levels.”
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