Key Points – US recession fears, which surged in late April 2025 following a Q1 GDP contraction and President Trump’s tumultuous tariff announcements that led economists to predict a 60%+ recession likelihood, have somewhat subsided in mid-May.
-A recent Reuters/Ipsos poll indicates a slight decrease in public concern about a recession and a marginal uptick in Trump’s economic approval, coinciding with a period of reduced tariff volatility.
-However, while some key April economic indicators don’t yet show a severe downturn, warnings persist—notably from Walmart’s CFO—that the full inflationary impact of tariffs on consumer prices is imminent, leaving the economic outlook uncertain.
Trump Avoids What Could Have Been a Recession
For a while in the spring, especially in the volatile month of April, the “r” word — “recession” — was everywhere.
The NPR headline from April 30, “The U.S. economy shrinks as Trump’s tariffs spark recession fears,” was typical of the moment, with both polling and economic data pointing at the strong possibility that a recession could happen by the end of the year.
That week, the Commerce Department released figures showing that the economy had contracted in the first quarter of the year. The definition of a recession is when that happens for two consecutive quarters.
Those figures, which covered the final stretch of the Biden Administration and the initial months of Trump, did not include April, when contradictory messages about tariffs led to major stock market volatility.
Economists Say the Word
By late April, per Business Insider, four top economists had proclaimed a recession “likely.”
“Small businesses that have for decades relied on a stable US system will have to adjust immediately and do not have the working capital to pay tariffs,” Torsten Sløk of Apollo Global Management told BI, in comments that came before the tariff pause. “Expect ships to sit offshore, orders to be canceled, and well-run generational retailers to file for bankruptcy.”
Adam Posen, economist and president of the Peterson Institute for International Economics, said in the BI story that there was a 65 percent chance of recession, and adding that “if we get inflation, the Fed will be behind the curve.”
“All told, stagflation is the optimistic scenario. More likely, the US will end up in a full-blown recession accompanied by higher inflation,” Bill Dudley, economist and former president of the New York Federal Reserve Bank, wrote in a Bloomberg op-ed in April.
Bruce Kasman, chief global economist at J.P. Morgan, saw a 60 percent chance of a recession.
“Even with the latest step-back from the draconian Liberation Day measures, what remains is still enough to push the US and China — and thus likely the global economy — into a recession this year,” he told BI at the time.
Pulling Back?
However, there are indications that the economy has stepped off the ledge a bit.
According to a Reuters report this week, a new Reuters/Ipsos survey has found that Americans’ approval of President Trump’s handling of the economy has risen from 36 percent to 39 percent, along with his overall approval rating, which has gone from 42 to 44 percent.
The poll also found that Americans are less concerned about a possible recession than they were last month.
“Some 69% of respondents in the new poll said they were concerned about a recession, down from 76% in a Reuters/Ipsos poll conducted April 16-21,” Reuters said. “The share who said they worried about the stock market fell to 60% from 67%.”
A big explanation for the improvement appears to be that there was a great deal of economic volatility in April, and there’s less of it in May.
“Overblown”?
Meanwhile, per Axios, there are indications that the recession fears were premature.
“With major indicators from April — the month of peak tariff uncertainty — now in, none show the kinds of recessionary or inflationary conditions implied by business and consumer surveys,” Axios said in a Thursday report.
Retail sales are steady, although the effect of tariffs on prices has not yet fully been baked in. And as pointed out by Axios, Walmart’s chief financial officer has pointed to upward pressure in the near future.
“We’re wired for everyday low prices, but the magnitude of these increases is more than any retailer can absorb,” Walmart CFO John David Rainey said this week in a CNBC interview.
“It’s more than any supplier can absorb. And so I’m concerned that [the] consumer is going to start seeing higher prices,” Rainey added. “You’ll begin to see that, likely towards the tail end of this month, and then certainly much more in June.”
About the Author:
Stephen Silver is an award-winning journalist, essayist and film critic, and contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. For over a decade, Stephen has authored thousands of articles that focus on politics, technology, and the economy. Follow him on X (formerly Twitter) at @StephenSilver, and subscribe to his Substack newsletter.
Trump In the Hotseat
