Powell also shared that early data suggests that GDP growth has slowed but not reversed. Still, consumer sentiment is at nearly record lows, and all over social media, everything seems to be a “recession indicator”: subtle signs people notice in their daily lives suggesting we could be on the brink of a downturn.

Some of these are more serious than others…

The general takeaway is: The vibes are off. So, are we headed for a recession? How will we know if we get there? And how much does that label really matter?

I’m David Gura, and this is The Big Take from Bloomberg News. Today on the show, John Authers, Bloomberg senior markets editor and a columnist for Bloomberg Opinion, will help us parse the official—and unofficial—recession indicators and understand what lies ahead.

John, a basic question to start right out of Econ 101: What is a recession? Define it for me.

John Authers: It’s a more complicated question than you think. A recession is when not only does growth slow down, but the size of the economy actually contracts, which doesn’t happen that often. The most common way to measure that is through gross domestic product. The most obvious symptom of it is unemployment.

The standard shorthand definition [of a recession] is two successive quarters of negative GDP growth.  But that's a shorthand definition.

Ultimately, it’s the Potter Stewart definition of pornography: “I know it when I see it.” That’s a Supreme Court quotation I’ve just given you there. But  generally speaking, if you have to question whether you’re in a recession, you probably aren’t. And if you are, you know all about it.

Gura:  Who effectively knows it when they see it? I gather the National Bureau of Economic Research [NBER] plays an outsize role here in determining whether or not we are, in fact, in a recession.

Authers: Yes. So the default definition of a recession in the U.S. is when the NBER says so. [They’re a] big group of very good academic economists with a lot of government backing behind them. And they take many things into account—obviously unemployment, gross domestic product mattering more than anything else.

The big problem with the NBER approach... For the purposes of history, for the purposes of analyzing data, looking back to see what happens during recessions, it’s brilliant. In real time, it’s close to useless because it’s of the nature of a recession that it needs to go on for a while, a matter of months, before you are sure it’s a recession. If you wait until the NBER announces that we are indeed in a recession, it’s almost certainly too late if you’re a business making a decision, or particularly if you’re an investor choosing about the stock market.

So my favorite example is 2008, the year of the global financial crisis. The NBER didn’t make that announcement till the first of December, by which point, Lehman Brothers had gone bankrupt [and] the stock market had dropped almost 50 percent.

From the point of view of decisions in the here and now, the NBER is not helpful. For looking back, for doing analysis, it’s the gold standard, I think.

Gura: There are other groups who move faster. And here I’m thinking about economists at the big financial firms. Who’s saying that we are headed for recession right now, at this moment in time, in 2025?

Authers: Naming names is tricky. Very few people are saying there’s a hundred percent chance of a recession, which is interesting because two years ago, quite a few people were saying that and it didn’t happen. More or less, everybody on the Street has formally raised their probability of a recession in the wake of, particularly, the “Liberation Day” tariffs, but just the sheer uncertainty that the tariff environment causes makes it that much more likely that the economy will slow down. The thing that’s fascinating here is the soft data versus the hard data.

Gura: This is the sentiment data.

Authers: Yeah, sentiment data, but some of it’s pretty practical sentiment. So the ISM Supply Managers Survey is asking you: Are your prices you’re having to pay going up or going down? Are you building your inventory or reducing it? etc. It’s a survey and it includes some sentiment, but it’s not purely sentimental. Now, the soft data suggests we are already in a recession. The way that confidence of small businesses, confidence of consumers, has dropped in the last few months has never happened before unless we’ve subsequently been in a recession.

That said, the hard data—the last unemployment numbers were fine, and inflation is coming down  nicely. The hard data is still basically, the technical term might possibly be mid-cycle slowdown, but basically no particular reason from the most important data to think that we are already in a recession. This is primarily about the amazing goings-on about trade policy, which we all know about by this point.  And the way people are reacting to them and how those reactions are changing their decisions in real time.

Gura: I’m curious, as you look at what the banks are saying about the probability of a recession and what they’re actually doing, how they’re positioning themselves: Is there any sort of divide there?

Authers: I don't see that much in the way of true retrenchment already by the banks. I don’t think somebody like Jamie Dimon is as sanguine as he was unless he means it. You don’t talk down the economy if you’re somebody like that, unless you really believe it’s necessary and responsible to do so. Jamie Dimon’s had an exciting and checkered career, but he doesn’t do alarmism.

So I’m most interested in the next couple of weeks when we hear from the companies that make things, and particularly the companies that import and export a lot of actual stuff rather than services. That’s when we will really get an idea. But I do believe the banks when they say they’re bracing for tougher times.

Gura: Wall Street economists have updated their forecasts, and people who play the prediction markets, like Polymarket, are weighing in. John, you wrote in your column [about] what those betting on the markets are telling you about their sense of the likelihood of a recession.  What are you seeing when you look at Polymarket and the like?

Authers: Polymarket—which during the election was accused, not totally fairly, of being somewhat right-wing or pro-Trump–biased—saw a chance of a recession of somewhat under 20 percent at the beginning of the year, which was on a little on the bearish side. It got over 60 percent before Trump pulled back on the main reciprocal tariffs, the 90-day pause. It’s still, at this point, over 50 percent that we have a recession by the end of this year, which needs to be triggered by the NBER saying so, or by two quarters of GDP being negative. Which means that you shouldn’t be making that bet. You shouldn’t be thinking it’s that probable unless you think the recession is probably already started.  

The people who play on Polymarket do have real money at stake. And that means that you should take them quite seriously.  The mere fact that people think that makes it more likely that you get a self-fulfilling prophecy, that people adjust their behavior accordingly, spend less, and you get a recession.

Gura: John, we’ve been talking about the statistics, the data [that] professional economists use to determine if there is a recession or there’s likely to be one. Let’s talk about some of the unofficial indicators that could give us a sense of where the economy is right now and where it’s headed. Are there any that you look to, maybe softer signs that the vibes are off in the economy?

Authers: In terms of the numbers I look at, things that do bother me somewhat: FedEx’s share price has been doing very badly. The significance of that is, obviously: If there is a purer play on globalization and on [the] level of economic activity than FedEx, I can’t think what it is. And the fact that its share price is going down isn’t all ‘top-down globalization is in trouble; better get out of FedEx.’ It’s people looking at their numbers and looking at what the company is saying and thinking they’d better get out.  And, by the way, that implies the economy is slowing down. That one does actually concern me quite a bit.

Another measure that isn’t foolproof—but, again, so many real people are playing with real money in a way that can have self-fulfilling consequences—is the metals market. The ratio of gold to copper—the amount of copper you could buy with an ounce of gold—has never been higher. Copper is basically something you buy when the economy is doing well, particularly when China is electrifying and building stuff, or when people are building lots of cars and houses. Gold is something you buy when you are worried, when you can’t think of anything better to do with your money than put it in the shiny metal and it’ll be safe. So I take that pretty seriously as an indicator that things aren’t good.

Gura: As you look at all of the data, hard and soft, where are you on this question of whether or not we are in a recession or headed for one?

Authers: This is the agonizing part of it: It really does depend on trade.  If tariffs on China stay at about 140 percent for any length of time, there has to be a recession. I don’t see how there can not be. The latest World Trade Organization estimates are that, assuming these level of tariffs, imports to the U.S. from China are gonna be down 70 percent. If you think how important those imports are, there’s no way you can source that adequately from anybody else in the very short term. It will mean shortages, it will mean factories having to go on pause.

If we really stick with the tariffs as currently laid out, there will be a recession. I would be astonished if there wasn’t. My best guess as to where trade policy is gonna go is that it’s gonna do enough damage that we will fall into something the NBER calls a recession by the end of this year.

Gura: Here’s a big think question: I'm curious how much naming a recession a recession matters. Going back to what you said at the top, you know it when you see it. If people are feeling economic hardship, they know the reality of the economy today themselves, does it matter if we are technically labeling something a recession?

Authers: It probably does a little, because this is a concept from George Soros, the hedge fund manager: He bases his whole investment approach around reflexivity, which is his idea that markets can create their own reality.  So in terms of inflation, if you think prices are gonna go up, you go out and buy stuff now, even before you need it. So there is more buying going on now, which pushes up the prices, which creates the inflation.  And similarly, if people are scared about bonds and they sell bonds and the rates go up, then that has an effect on the economy because the rates on bonds matter that much to the economy.  So if you actually say there’s a recession, it does matter.

That said, I think the experience of the last 10, 20 years, and particularly  the experience of Biden, does suggest that it might not matter that much. The hard data is fairly clear that there wasn’t an aggregate recession under Joe Biden. There were two successive quarters of very slight declines in GDP growth. I know very few people who really think that was a true recession, people who do economics for a living. That said, you only need to see what happened in the election, you only need to take the slightest vibe just to keep your eyes open as you walk down the street anywhere in this country, it felt like a recession for a huge proportion of people. And they acted accordingly.

Gura: Do you think that George Soros would say that us having this conversation is an example of reflexivity? That us talking about the sort of zeitgeist feeling that there could be a recession soon is likely to feed into it?

Authers: Yes. I mean, that's always the accusation made against any of us in the media. But there is some degree of truth to it.  One of the standard things politicians say when opposition say the economy is terrible is: ‘You are talking down the economy; the economy would be fine if you would stop saying nasty things about it.’  There is a degree of truth to that. I don’t think you and I having this conversation is really going to make people sell all their stock portfolios and lock up their factory. But George Soros would definitely say that the zeitgeist, the broader sentiment, the more people talk about these things, that can create perceptions of reality can change the actual reality.

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