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Home » Americans expect the economy to sour — here’s when the data could show it
Finance

Americans expect the economy to sour — here’s when the data could show it

MNK NewsBy MNK NewsApril 27, 2025No Comments4 Mins Read
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Americans are feeling increasingly downbeat about the economic outlook. Some Wall Street economists believe the US will enter a recession this year. But most economic data isn’t flashing red just yet, leaving a pressing question as to when the ominous sentiment showing up in surveys will actually translate to a hit to growth.

The turning point could come this summer, several economists told Yahoo Finance.

“We will likely see continued softness in the survey data before the hard data start to weaken around mid-to-late summer, at which point higher prices, weaker spending, and slower hiring could start to emerge in the official statistics,” Goldman Sachs US economist Emanuel Abecasis wrote in a note to clients.

In a wide-ranging analysis of 45 different economic indicators, Goldman Sachs found that economic data typically takes about four months to show “clear signs of deterioration” when a particular event drives the slowdown. In the current environment, the event is President Trump boosting the US’s effective tariff rate to its highest level in a century, which many believe will drive up inflation and slow down growth.

The Goldman Sachs economics team said there is a 45% probability that the US economy will enter a recession in the next 12 months, well above the typical 15% chance seen in any given year.

“It is still too early to draw strong conclusions from the limited data we have so far, and we will continue to watch for indications of slower growth in the coming months,” Abecasis wrote.

Read more: What is a recession, and how does it impact you?

At the current pace, the data is following the path of other event-driven recessions like the 1973 oil spike and the 1980 recession spawned from increasing interest rates. Typically, the survey data declines first, which has happened with the University of Michigan’s consumer sentiment index hovering near its lowest level since 1978.

The so-called hard data, which measures actual economic activity, typically picks up following the event. This occurred in March with retail sales seeing the largest monthly increase in nearly two years. Meanwhile, durable goods orders rose 9.2% in March from the previous month, blowing away forecasts for a 2% rise as one of the biggest increases in aircraft orders on record pushed the number above consensus.

Economists argue that these data points indicate consumers and businesses are front-running Trump’s tariffs and snatching up items before price increases hit.

“The thing with any pull forward of demand is that the drop thereafter can be extremely painful, because if you’ve ordered as a business, you know, half of your inventory in order to stock up, then you’re not going to be reordering the following month,” EY chief economist Gregory Daco told Yahoo Finance. “So you’ve pulled forward demand, but that leads to a significant drop off in the next time period.”

On the consumer side, Daco pointed to auto sales as an example. Auto sales surged 5.3% in anticipation of Trump’s tariffs. But “people aren’t going to buy a car again” the next month, Daco said. He expects the full extent of the drop-off in demand to start showing in June, when economic data for activity in May is released.

Read more: How your vehicle’s make and model affect car insurance costs

But Daco and other economists told Yahoo Finance the slowdown in activity is already happening in April. RSM chief economist Joe Brusuelas points to data from the Port of Los Angeles, where shipment volumes have been declining. Expected incoming traffic to the port is expected to decline 44% between now and May 10.

“In June, what that means is there’ll be less goods on the shelves.” Brusuelas said. “Less goods equals higher prices. At a time when inflation goes up, that means less disposable income, less demand.”

Brusuelas notes that other key indicators, like weekly filings for unemployment benefits, haven’t ticked up yet. But that could follow as orders fall in the coming months and companies look for ways to cut costs amid weaker demand.

“The economy is going to slow,” Brusuelas said. “At best, it’s going to grind to a halt. At worst, we’re going to be in a recession. I think we have a very mild garden-variety recession, something that goes on for six to nine months.”

The Goldman Sachs economics team said there is a 45% probability the US economy enters a recession in the next 12 months, well above the typical 15% chance seen in any given year. (Reuters/Mike Segar/File Photo)
The Goldman Sachs economics team said there is a 45% probability the US economy enters a recession in the next 12 months, well above the typical 15% chance seen in any given year. (Reuters/Mike Segar/File Photo) · Reuters / Reuters

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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