Is a US recession coming? 5 key questions answered

TNN / Updated: Apr 19, 2025, 10:16 IST

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Is a US recession coming? 5 key questions answered

Representative AI image via Lexica

The US economy may be heading into rough weather — and when America slows down, the world feels the tremors. With Trump tariffs putting global trade under pressure and India closely tied to both the US and China, a possible recession in the US can, at the very least, slow down growth rate in India too.Here's what economists and investors are saying:
5 key questions answered

1. How close is US to a recession?

Five agencies and experts have following to say:

Agency	Key Reasons
Conference Board’s Leading Economic Index (LEI) has declined at least 15 of the past 18 months; board says a “significant growth slowdown” is baked in, though a full recession is still not its base case	Weakness across manufacturing new orders, consumer expectations, and building permits
Reuters economists’ poll of April 7 puts median probability of recession in next 12 months at 45% – highest since Dec 2023	Tariffs already shaving 0.8 percentage point off 2025 GDP forecasts; business sentiment and capex plans falling
Moody’s Analytics’ Mark Zandi in a March 2025 podcast put recession odds at 40% by end-2025	Tariffs, fading fiscal impulse, and tight credit standards
Bloomberg Opinion’s John Authers says odds of a 2008-style policy mistake are rising; warns “it’s best not to wait for NBER confirmation”	15-month slide in the Conference Board Leading Economic Index, tariff shock to supply chains, and a deeply inverted 2-10 year Treasury curve
Ray Dalio, founder Bridgewater Associates, has said the US is “very close to a recession,” adding that tariffs are “like throwing rocks into the production system” and could lead to “something worse than a recession” if mishandled	Tariff shock is crippling supply-chain efficiency; combines with ballooning US debt, a “breakdown of the monetary order,” and intensifying geopolitical conflict — conditions, Dalio says, mirror the 1930s

2. US recessions since 2000

Recession	Peak	Trough	Duration (months)	Real GDP peak-to-trough	Peak Unemployment
Dot-com / 9-11	Mar 2001	Nov 2001	8	–0.3%	5.7%
Great Recession	Dec 2007	Jun 2009	18	–4.0%	10.0%
Covid-19 Recession	Feb 2020	Apr 2020	2 (shortest on record)	–19.2% (q/q annualized Q2)	14.7%

3. Can US recession trigger global recessions?

US recessions can go global when they coincide with a systemic financial shock (2008) or an exogenous event (pandemic). Otherwise, spill-overs are milder. IMF has ruled out a global recession.

2001 US recession did not cause a global one. World GDP grew 2.5%, but trade growth collapsed.
2007–09 was a US & global recession — first post-war global contraction (~1.3% world GDP '09)
2020 Covid lockdown pushed world GDP down by ~3%, deepest since 1945

4. China & India recessions since 2000

Periods of outright GDP contraction (past 25 years)

China

Q1 2020 (–6.8% y/y) – first contraction since 1976
Notes: Annual growth still +2.2% for 2020; 2022 growth just 3% (worst outside 2020)

India

FY 2020-21 (–7.3%, with –24% in April–June 2020); RBI classified H1 FY21 as a “technical recession”

Notes: Previous near-recessions

1991 balance-of-payments crisis (real GDP +1%)
2008-09 slowdown (growth fell to 3.1%, but stayed positive)

5. Why a recession in India is different from one in the US

Dimension	United States	India
General nature of primary shock	Financial cycle & consumer credit (housing, credit cards); inventory cycle	Supply-side shocks (oil, monsoon), external capital flows, informal-sector demand
Stabilising factors	Large: Unemployment insurance, progressive taxes mitigate hit	Small; Informal employment > 45% limits social-security reach
Monetary-policy pass-through	Fast: Deep bond market, mortgage refinance	Slower; Bank-led system, high share of small firms outside formal credit
Job & Wages	Unemployment rises sharply but benefits cushion income	Job losses push workers back into agriculture/informality, depressing under-employment more than jobless rate
Global spillover	A US recession tightens global financial conditions via dollar funding & risk aversion	An Indian recession mainly drags on regional trade, remittances, and commodity demand; financial contagion limited by capital controls

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