Are We Likely to See a Recession?
When economists speak up, it’s worth paying attention, especially when their tone softens from alarm to cautious optimism. Based on the latest Wall Street Journal survey of 69 professional economists, here’s how the U.S. economic landscape looks right now — and why we should neither panic nor get too comfortable.
Just a few months ago, economists assigned about a 45% chance that the U.S. would enter a recession within a year. That estimate has now dropped to 33%, signaling modestly brighter optimism but still significantly higher than the 22% likelihood estimated back in January. That means while things appear less risky, the shadow of a recession hasn’t fully lifted.
Forecasts for real GDP growth (which adjusts for inflation) have improved slightly for the final quarter of 2025, up to 1.0% from the more pessimistic 0.8% projected in April. That said, it remains far below the more hopeful outlook from earlier this year. By 2026, economists anticipate growth potentially increasing to 1.9%.
So, while things may be moving forward, they’re doing so at a pace that’s slower than most of us would prefer. Given history, small changes in GDP indicate an economy that’s holding steady rather than poised to sprint ahead.
Jamie Dimon, the CEO of JPMorgan Chase, was recently interviewed and stated that, despite the U.S. and China agreeing to pause many tariffs for 90 days, the risk of a recession in the United States remains a real concern.
A few weeks ago, Dimon was more negative and said a recession was likely. His view is a little less harsh, but he still thinks it’s too soon to say the danger has passed. According to Dimon, if a recession were to happen, he doesn’t know how bad it would be or how long it would last, but he wouldn’t rule it out.
He pointed to his bank’s economic team for the actual forecasts. JPMorgan’s Chief U.S. Economist, Michael Feroli, currently puts the odds of a recession at just under 50%. That means economists see the chance of a recession as a toss-up, not guaranteed, but still very possible.
The significance of this news is that the U.S. and China have recently agreed to temporarily lower tariffs on each other. That trade truce, along with a U.S. pause on other tariffs, provided businesses and investors with some short-term relief. But since it’s only a 90-day pause, it is unknown what will happen when that deadline ends. If negotiations break down, tariffs could come back, and that uncertainty weighs heavily on the economy.
When large companies reported their most recent earnings, the results were better than expected. About 81% of companies in the S&P 500 beat expectations, according to the Financial Times. Tech giants like Microsoft and Google, along with major banks, carried most of the weight, showing strong profits despite a shaky economy. This doesn’t mean every industry is booming; retailers and smaller companies are feeling the pinch, but the strength of large corporations has helped calm recession fears.
Another reason people are less worried is that investors are still willing to lend money to companies. The gap between what it costs businesses to borrow money compared to the government has shrunk to its lowest level in over 20 years. Bond funds, which are similar to savings accounts for investors, have experienced a significant surge in cash inflows, reflecting confidence that companies won’t default anytime soon. This kind of confidence makes it easier for companies to continue investing and hiring, which in turn supports the broader economy.
So, are we heading into a recession? The answer seems to be not right now. Big corporations are still powering through and giving the economy some breathing room. However, if job growth slows further or if consumer spending falls, the risk could rise again. For students like us, this moment serves as an important reminder that the economy isn’t just about numbers; it’s about confidence. As long as people believe companies are strong, markets remain calm. But if that belief cracks, downturns can happen quickly.
Right now, strong corporate profits and investor confidence are buying time for the U.S. economy. But beneath the surface, challenges remain. If students want to understand the business world, this exemplifies how markets and real-life conditions can tell two different stories.
Ultimately, the debate over a potential recession highlights the complexity of the U.S. economy. On one hand, the strength of major corporations and investor confidence is keeping the economy afloat and giving people hope that a downturn can be avoided. On the other hand, weak job growth and uneven performance across industries remind us that risks are still present. For students learning about business, this moment is a valuable lesson: economic forecasts aren’t certain, and resilience often depends on a mix of strong leadership, innovation, and the ability to adapt when challenges arise.
Photo Caption: As of just a few months ago, economists have assigned about a 45% chance that the U.S. would enter a recession within a year.
Photo Credit: Unsplash
