Multiple warning signs flash as US recession risks mount

A confluence of troubling economic indicators - plunging consumer confidence, worsening corporate sentiment, and deteriorating fiscal health - has heightened fears that the US economy is barreling toward a recession.

US consumer gloom hits 12-year low

The US Conference Board's Consumer Confidence Index dropped sharply for the fourth straight month in March, sinking to 92.9 - its lowest level since 2021. Even more alarming, the Expectations Index, measuring short-term outlooks for income and employment, collapsed to 65.2, far below the 80 threshold that typically signals an impending downturn.

"Consumers' expectations were especially gloomy, with pessimism about future business conditions deepening and confidence about future employment prospects falling to a 12-year low," said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board.

Inflation remains a top concern, but respondents also cited growing anxiety over trade policies. Plans for major purchases, like homes and cars, have weakened, suggesting households are bracing for tougher times ahead.

CFOs brace for 2025 recession

The pessimism isn't limited to Main Street. A CNBC CFO Council survey reveals that 60 percent of chief financial officers now expect a recession in the second half of 2025, with another 15 percent predicting one by 2026.

The primary culprit? Trade policy chaos. 30 percent of CFOs rank US trade actions as their biggest external risk, outpacing inflation and weak consumer demand. Many described the Trump administration's approach as "too chaotic," "disruptive," and "extreme," making long-term planning nearly impossible.

The CNBC report noted that the animal spirits post-election have faded into pessimism, with 95 percent of CFOs citing policy chaos as a business planning hurdle.

Moody's sounds debt alarm

Moody's issued a stark warning Tuesday, stating that America's fiscal health continues to deteriorate as ballooning budget deficits and rising debt servicing costs threaten long-term stability. The credit agency noted this downward trajectory has accelerated since its November 2023 decision to downgrade the US credit outlook to negative—a move that maintained the AAA rating but signaled growing risks.

Taken together, these warning signs paint a troubling economic outlook where consumers are pulling back as confidence evaporates, businesses are paralyzed by policy uncertainty and investors face mounting risks from debt and deficits. Compounding these challenges, markets now fear the US government's protectionist policies may simultaneously reignite inflation and accelerate an economic downturn.