What is a Recession?

A recession is traditionally defined as two consecutive quarters of declining Gross Domestic Product (GDP). However, the National Bureau of Economic Research (NBER) uses a broader definition: a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.

Why Did We Pick These Data Points?

Our dashboard combines six critical economic indicators, each carefully weighted based on their historical accuracy in predicting recessions:

• Yield Curve (25%): The spread between 10-year and 2-year Treasury yields has historically been one of the most reliable recession predictors. An inverted yield curve (negative spread) has preceded every recession since 1955.
• GDP Growth (20%): As the primary measure of economic output, GDP provides direct insight into economic health and is a fundamental component of recession definition.
• Unemployment (15%): Rising unemployment rates often signal economic distress and reduced consumer spending power.
• Inflation/CPI (15%): High inflation can lead to tighter monetary policy, which historically has increased recession risks.
• Bank Predictions (15%): Major financial institutions' forecasts provide valuable expert analysis incorporating both quantitative and qualitative factors.
• Market Indices (10%): Stock market performance often reflects broader economic sentiment and can indicate future economic conditions.

What is Causing the U.S. to Get Closer to a Recession?

Several factors are contributing to increased recession risks in 2025:

• Persistent inflation pressures forcing continued monetary tightening
• Rising interest rates affecting business investment and consumer spending
• Global economic uncertainties and trade tensions
• Post-pandemic economic adjustments and supply chain realignments
• Labor market transitions and wage pressures

Can the U.S. Avoid a Recession?

While recessions are a normal part of the economic cycle, they're not inevitable. The U.S. could potentially avoid a recession through:

• Careful monetary policy management by the Federal Reserve
• Strong labor market resilience
• Healthy consumer spending and savings
• Productive business investment and innovation
• Effective government fiscal policies

Our dashboard helps track these factors through key economic indicators, providing real-time insight into recession risks and economic conditions.