Recessions Aren’t Random! They’re Reactive.
“We’re heading into a recession.”
This phrase has weighed anxiously on the mind of every American citizen in recent months and silently threaded its way through headlines and economic forecasts. Though rarely stated outright, it underlies many criticisms and analyses of the current administration’s economic policy, reflecting and contributing to the growing unease of American consumers.
This growing concern is showing up in more than just news commentary. According to an article by Denise Chisholm, the Director of Quantitative Market Strategy at Fidelity Investments, Google searches for the word ‘recession’ are at all time highs, with numbers near comparable to trends shown during the 2008 economic crisis. Amid this anxiety, a new trend has emerged on social media: “Recession Indicators.” Content creators have been pointing to re-emerging social behaviors, new marketing tactics, and even the revival of older fashion and consumer trends as signs of economic decline. These posts serve as informal warnings, urging audiences to prepare for potential financial instability.
However, attempting to predict an economic downturn isn’t a new phenomenon. Historically, people have searched for patterns to signal a shift in the economy. One well-known example is the “lipstick index,” a term coined by Leonard Lauder, chairman of cosmetic brand Estée Lauder, in 2001. The theory suggests that during financial hardship, consumers are more reluctant to buy grand, big-ticket luxury items and instead favor small, more affordable luxuries like cosmetics. While not always accurate, turning to such indicators reflects a broader tendency to interpret everyday behaviors as economic signals.
Public Anxiety and Cultural Signals
In the modern digital age, “recession indicators” have taken on new, unconventional forms, which are popularized through social media. People have begun pointing to a wide range of cultural and economic shifts as signs of an impending downturn. The following examples highlight some of the most prevalent indicators in circulation:
The term “recession blonde,” has been trending on TikTok, and a recent article from the popular fashion magazine Vogue defined it as: “the darker, more brown-tinted hue that many are letting grow in with their normally bright, golden strands [since] many are opting out of their touch-up appointments to save money.” In 2009, the term “recession hair” circulated in the media, as many consumers had stopped receiving haircuts and styling appointments following the 2008 financial crash. According to Olivia Casanova, colorist and co-owner of IGK salon in Manhattan, “blonde highlights and touch-ups can range anywhere from $200 with a junior colorist to $600 with a senior colorist… [Many people] have been opting to save about $100 to $300 a session,” by choosing to leave their hair “recession blonde” instead of maintaining their dye jobs.
The US Army announced on June 7th, 2025 that it surpassed its fiscal year 2025 recruiting goals four months ahead of schedule, marking the first time in years that the army has not fallen short of its quota. They declared that they had signed contracts with more than 61,000 future soldiers, which is more than 10% higher than the 55,000 recruits targeted in 2024. Recently, the average contracts per day have also exceeded last year’s levels by as much as 56% during the same period. Defense Secretary Pete Hegseth noted: “It’s also the Air Force…the Navy…Marine Corps, Coast Guard,” all branches have seen young people enlisting in record numbers. Petty Officer Cory Flament, a navy officer in Maryland, noted that in 2008, when the full force of the recession was hitting, the bad job market meant good news for military recruiters, and Flament’s not the only one that noticed the trend. When promised stable income, bonuses, healthcare, insurance, housing and tuition assistance, the military becomes a more attractive option in an unstable job market.
According to the U.S. Travel Association and the Bureau of Labor Statistics’ (BLS) Consumer Price Index, average travel costs are 2% lower than they were this time in 2024. The index combines data from individual travel categories, including airfares, lodging, meals and rental cars. This is also the third month in a row that travel costs have been recorded to go down, with hotel room rates down 1.7% over the past year and airfares down 7.4%. When compared to the price of airfares and hotel rooms over the past decade, airfare rates are down an incredible 18.5%, and hotels 23.7% in comparison to May 2015. According to a survey by the consumer finance company Bankrate, when asked if they planned on taking a summer vacation, some 46% of respondents said they are planning a vacation, which is down from 53% in 2024. Of those who don’t intend to travel, nearly two-thirds (65%) said money was the main reason. Sarib Rehman, CEO of e-commerce platform Flipcost told YahooFinance: “The demand for travel and hospitality services typically declines as consumers cut back on discretionary spending,” and in response, businesses dependent on tourism lower prices and offer more promotions to attract customers.
While these recent trends may suggest that Americans are feeling economic pressure, it is important to emphasize that these trends don’t necessarily confirm that a recession is underway. Experts have pointed out that such trends could just be a result of “things going in and out of style, [which] has nothing to do with the economy” according to Washington State University economist Christopher Clarke. The real answers on if we are truly heading into a recession come from more definitive economic data.
Are “Recession Indicators” Reliable?
A recession is defined as a significant decline in economic activity that is spread across the economy lasting more than a few months. There are many economic indicators that demonstrate the nation’s risk of entering into a recession, including consumer confidence, the transition to new administrations, high credit spending, and more. When these indicators begin to trend down, a window of economic vulnerability opens up that puts the nation at risk of entering a recession due to a negative shock to supply or demand. Understanding these indicators helps to separate speculative concern of the public from the more concrete signals that economists rely on to assess recession risk.
“The combination of a window of vulnerability and a negative economic shock can give you a recession,” according to Lakman Chuan, the Economic Cycle Research Institute co-founder. Currently, consumer confidence in the economy is at an all-time low, with the Economic Conference Board stating on April 22 that its consumer confidence index dropped 7.9 points to 86.0 this month, the lowest reading since May 2020. With these levels of distrust in the minds of American consumers, the nation is at risk of entering a window of economic vulnerability.
Tariff Policy as a Catalyst
Trump’s push to reshape world trade by imposing tariffs on all U.S. imports has sent shockwaves through financial markets, wiping out trillions of dollars in stock market value, shaken investors’ confidence in U.S. assets, and possibly having devastating effects to the economy. Not only that, but the tariffs have contributed to a decrease in consumer and business confidence, and when faced with increased uncertainties on the future of the economy, many global businesses have taken down their revenue forecasts. In a Reuters poll, 0 out of 300 economists surveyed stated that the imposition of tariffs had a positive impact on business spending and investment sentiment, with 92% of them stating that they will have an overall negative impact and the remaining 8% saying the impact would be neutral. With the imposition of the tariffs, the administration effectively “cut off [its] largest trading partner… [having] all sorts of negative impacts on real incomes and ultimately demand” as stated by Timothy Graf, head of macro strategy at global financial services and bank holding company State Street. As the economy feels the ripple effect of these newly imposed tariffs, it becomes clear that they are not merely a foreign policy tool, they are a domestic economic disruptor, and rather than shield the economy, they may accelerate its downturn.
The economy doesn’t appear to be in a full recession yet; rather, it is only experiencing a period of deceleration, especially in the service sector. However, it is within a context of economic fragility that the broader implications of Trump’s trade policy must be examined, and while economists have a hard time agreeing on this possibility of a recession, most find themselves agreeing with one statement – the tariff plan will be detrimental to the U.S. economy.
Learning from the Past: 2018 Washing Machine Tariff
In order to better understand why, let’s look back at the washing machine tariff imposed by Trump’s administration in 2018. The 30-50% tariff on all imported washing machines placed a high tax burden on US companies importing washing machines, which lowered their profit margins. As a result, these companies raised the prices of the imported washing machines, making them more expensive to American consumers. That is the primary purpose of a tariff, to decrease demand for imported products and create space for domestic producers. That was Trump’s original goal, to increase domestic production and capital.
And this effort was moderately successful. According to the Wall Street Journal, many foreign washing machine companies moved their production factories to the US in order to remain competitive in the American market and avoid tariffs, which opened about 1800 new factories and created thousands of new jobs for Americans.
However, there is more to consider. One of the most misunderstood concepts about tariffs is that when imported products become more expensive, domestic products remain the same price. This is not true. Not only does the supply of the product go down due to businesses that cannot afford to remain competitive in the market, but the increased demand for the cheaper, domestically produced products causes the domestic supply to decrease. The increased quantity demanded will still cause the domestic price to go up, and consumers will consequently end up paying more for the product across the board.
Not only that, but tariffs have effects on related industries as well. When the tariff on washing machines was imposed, the price of all imported and domestically produced dryers increased accordingly. Every industry that required washing machines and dryers as a part of their business– hospitality, healthcare, laundries, textiles and manufacturing, fitness centers, correctional and military facilities– all had to pay the higher price and squeeze their profit margins, causing them to not only demand higher prices from consumers, but also layoff employees to account for higher costs. All of these increases in prices ended up costing the average American household $625 each, with a total cost estimated to be $1.5 billion, according to the Wall Street Journal. The tariffs were, essentially, an inefficient and costly attempt at job creation.
Economists agree there are more cost-effective ways to create jobs in manufacturing industries, without taking away from other sectors. It’s also important to consider that tariffs are really hard to remove, with many remaining in place for decades after their implementation by an administration. When imposing tariffs, a lot of consideration should be used to take into account possible long term impacts. And that is exactly what makes Trump’s newly announced tariffs so alarming: they mirror the same flawed logic as the 2018 tariffs, only on a much larger and more aggressive scale.
The Flawed Logic of “Reciprocal Tariffs”
Trump announced on April 2, 2025 that he would be imposing tariffs on over 180 countries. In a White House video titled “My Fellow Americans, this is Liberation Day,” he claimed the goal of the tariffs was to “supercharge our domestic industrial base, pry open foreign markets and break down foreign trade barriers.” Essentially, he wants to eliminate foreign competition to benefit American industries by imposing reciprocal tariffs on countries that had supposedly been unfairly tariffing the US.
The White House published this chart, with the second column labeled: “Tariffs to the USA, Including Currency Manipulation and Trade Barriers.” This is what they claim the tariff rate for the US is in other countries. In this column, countries like Vietnam, Cambodia, Madagascar and Laos are said to have over a 90% tariff on the US. Additionally, the White House released this document called Reciprocal Tariff Calculations to demonstrate where the numbers were sourced from, supported by the given equation:
This can be broken down: According to the document, ΔTi is the effective tariff rate, Xi is total exports, and Mi is total imports. The greek letter epsilon (ε) represents how sensitive customers are to higher prices and the greek letter phi (φ) represents how likely prices are to increase, which are constants that the White House set at 4 and 0.25, respectively. When multiplied together, these constants will cancel each other out, leaving 1 multiplied by the total imports. When you take this into account, the equation for a country’s tariff on the US simply becomes net exports divided by total imports, which is just the trade deficit divided by total imports. Although it appears to be a very advanced calculation, it is in fact very rudimentary.
The main issue with this approach is that these “reciprocal tariffs” are not actually based on existing foreign tariffs on American goods. Instead, they are rates based on the trade imbalance. More specifically, it is the ratio of how much a country buys from the United States compared to how much the U.S. buys from them. This suggests a possible goal of reducing the U.S. trade deficit, despite there being little evidence that trade imbalances are actually a bad thing. Moreover, many of the targeted countries do not impose comparable tariffs on American goods at all, making the prospect of negotiating the tariffs down particularly difficult. In essence, the problem that Trump is trying to compensate for isn’t that countries are tariffing the U.S., it’s that they aren’t buying enough from the U.S..
The administration’s reasoning is clear: they prefer profiting from exports over incurring losses through imports. They argue that this strategy supports the revival of American manufacturing and will help restart the country’s economic engine. While these are respectable and appealing goals to all Americans, this approach does not achieve this purpose. It lacks the backing of solid economic modeling or thorough analysis, and instead uses a simplistic shortcut. Not only will it devastate the economy, but it will also burn holes in consumer pockets. The Peterson Institute for International Economics found that the imposition of only a 10% tariff on every country would cost the average American household $1700 a month from higher prices, and 684,000 jobs as a result of the downturn in industries affected by higher prices.
What happens next?
The short answer is this: economists are unsure.
So far, negative results have already taken effect. Goldman Sachs raised their odds of a U.S. recession within the next year from 20% to 35% after Liberation day, which marked the latest upsurge of recession fears on Wall Street. The looming risk of tariffs can make businesses and consumers uneasy, potentially sinking the economy further. “If both businesses and consumers start to worry and pull back their spending, that is what can tip the U.S. over into a recession,” according to economist Kara Reynolds at American University. However, trade tensions have calmed down more recently, prompting J.P. Morgan Research to reduce their probability of a global recession from 60% to 40%. While the possibility of a recession remains uncertain, any further unresearched trade policy has the chance to be a catalyst for an economic disaster.
Social trends may reflect recession fears, but they aren’t reliable economic signals. The real threat lies in aggressive tariff policies that disrupt trade, raise consumer costs, and shake market confidence. While a full recession isn’t guaranteed, the economy is clearly vulnerable—and these policies could push it over the edge. The administration should choose their next steps carefully.