Is A Recession Coming?

There seems to be one question on everyone’s mind this week: Is a recession coming? The chatter started when President Trump acknowledged that “this is a period of transition” and wouldn’t rule out that a recession might be coming. Then Monday marked the worst day for the S&P 500 since the beginning of 2025, and Trump imposed 25% tariffs on all steel and aluminum imported into the U.S. which will likely make many of the things we buy more expensive. 

We get it. It’s tough to see your portfolio hit record highs and then drop just as quickly in a few short weeks. But it’s not all terrible. Inflation eased more than expected in February. Plus, almost half of all days in the stock market are “down” days, and the stock market tends to have weaker performance at the beginning of new Presidential terms. Plus, if we’re headed for a recession, recessions are normal. 

This week on the HerMoney Podcast, Jean Chatzky is joined by economist Kathryn Edwards to help us define what a recession is and if we should be expecting one in the near future. 

What Is a Recession?

Jean Chatzky: Before I even get to the is a recession coming question, what is a recession?

Kathryn Edwards: A recession is a downturn in economic activity that exhibits certain features. It hits certain beats, but typically you see a pullback of economic activity. People spend less money, there are layoffs in the economy, and the labor market slowly recovers.

Jean Chatzky: And has that definition changed over time?

Kathryn Edwards: You might have learned in your undergraduate textbook that it’s two-quarters of negative economic growth. That definition hasn’t really been functional for a long time. The way that we figure out whether or not we’re in a recession is that there’s a group of economists at the National Bureau of Economic Research that monitors all the data of economic activity and comes to a consensus that the economy has, in fact, slowed. They’re normally very late, so they won’t decide that the economy has gone into recession until months afterward. We try to gather as much evidence as possible to decide if there is, in fact, a decline in the economy.

Is A Recession Coming?

Jean Chatzky: Until very recently, it seemed like the Federal Reserve had engineered the soft landing that is often thought to be so elusive. Now, all of a sudden, there is more talk of recession. How did we get here when just a few months ago, the S&P 500 was hitting record highs?

Kathryn Edwards: Before 2022, there was very little historical evidence that you could reduce high inflation without hitting a recession. And at some point, forecasters and economists realized that we were not going into recession. The economy looks really strong. So that takes us through the end of 2024 and we’ve brought down inflation. 

Kathryn Edwards: What’s happening now is the data is flashing red. And historically, we should not be in a recession. We just beat back inflation. The unemployment rate is 4%. All of our historical experience would say we are about to kick off an era of growth. It is the data that has people spooked, and that’s in part because U.S. economic policy took a drastic change. So the idea that we would have a recession as a result is not surprising.

The #1 Rule of Recessions: DON’T PANIC

Jean Chatzky: Right now, the volatility is terrible. The stock market is up and down… What do you want individuals as job holders as savers and investors as borrowers? What are the moves?

Kathryn Edwards: The number one move is not to panic. The long story doesn’t change. You live in the richest and most successful economy in the history of the world that produces jobs, income, and wealth at a breakneck pace, and that won’t change. The U. S. economy will continue to grow. It will continue to provide economic opportunity.

Kathryn Edwards: Your investment portfolio? It’ll go down because the economy will go down. But your long-haul investments will go back up again. Make sure your financial house is in order. If you have a credit card, try to pay it off. If you have some money in savings, try to add a little. If it makes you feel better to go through your resume, do that. If it makes you feel better to ask for a performance review from your boss to remind him that you’re very good at what you do, you can do that. Recessions are scary, but we live in a very stable economy and whatever happens, we will get through. It won’t be painless, but there’s growth at the end.

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MORE ON HERMONEY:

• HerMoney Podcast Episode 331: Investing During A Recession
• 6 Women Who Made It Through the 2008 Recession On Their Best Money Advice
• It’s Tax Time: When To DIY Or Hire An Expert

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