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Discussions of a potential recession are circulating everywhere, fueled by tariffs, government job cuts, budget reductions, and immigration restrictions. Any one of these factors alone could temporarily burden the economy, but together, they create simultaneous pressures across multiple sectors, potentially causing severe economic damage. White House officials have warned that, as Treasury Secretary Scott Bessent stated, the economy may require a "detox period." At the same time, Donald Trump’s promised deregulation and large-scale tax cuts are being positively received by many businesses, as they could stimulate investment and hiring.

Key economic data has yet to fully reflect the effects of Trump’s presidency. The Wall Street Journal is tracking various indicators to determine whether the U.S. can avoid a recession or is heading toward one. Several notable signs focus on businesses, consumers, and workers.

Businesses Are No Longer Talking About a 'Soft Landing'

• The phrase “soft landing” has significantly decreased in corporate discussions. During the last three months of 2024, the term was mentioned 61 times in U.S. corporate earnings calls, but since early this year, it has appeared only 7 times.

• While executives avoid publicly criticizing Trump’s policies, a March CEO survey showed that business confidence for the next 12 months had fallen to its lowest level since November 2012.

• Instead, tariffs have become a major topic. Mentions of tariffs in S&P 1500 earnings calls surged from 49 times in Q1 2024 to 683 times in Q1 2025.

• The Small Business Optimism Index declined in February, though it remains above average. However, the Uncertainty Index has reached its second-highest level in history, indicating that businesses find it increasingly difficult to predict policy changes.

Consumers Across All Income Levels Are Reducing Spending

• Due to economic concerns, consumers are cutting back on spending in all categories.

• According to a University of Michigan survey, the Consumer Sentiment Index has fallen to its lowest level since November 2022, showing a consistent decline across all age groups, education levels, incomes, political affiliations, and geographic regions.

• Consumers are making fewer impulse purchases at gas stations, while Walmart shoppers increasingly opt for smaller package sizes toward the end of the month.

• Sales of discount alcoholic beverages are rising, while luxury goods purchases are declining.

• Airfare sales are slowing, particularly in same-day bookings, as businesses scale back travel budgets and domestic leisure travelers delay trips due to higher costs.

• Small businesses in immigrant communities report a decline in consumer spending, partly due to fear of mass deportations under Trump’s administration. Hispanic consumer foot traffic has also fallen, impacting major retailers.

Workers Are Feeling Increasingly Uncertain

• The labor market remains strong, with the February unemployment rate at 4.1%, but job cuts and corporate cost-cutting are raising concerns among workers.

• A New York Fed survey found that concern over rising unemployment jumped from 34% in January to 39.4% in February.

• A Glassdoor survey reported that employee optimism about their employers has dropped to its lowest level since 2016.

• In February, U.S. companies announced 172,017 layoffs, the highest level since July 2020. While government job cuts played a role, private-sector layoffs more than doubled.

Unemployment Insurance Claims May Be the Best Early Indicator

• While overall jobless claims remain low, they have surged in Washington, D.C., Virginia, and Maryland, rising 49% year-over-year.

• Federal employee jobless claims are also increasing as government budget cuts impact contractors reliant on public sector spending.

• Companies linked to U.S. Agency for International Development (USAID) and other federal programs face increasing financial strain due to funding reductions.

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