Recession has been a term thrown around a lot in the past several years. Even though the stock market is back near record highs, trade tariffs, continued inflationary concerns and unknown effects from other economic policies of the Trump administration have people wondering if a recession could be on the horizon.
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To gain a clearer understanding of what may be ahead for the U.S. economy, I asked ChatGPT if a recession was coming soon. Here’s what it had to say.
Is a Recession Coming Soon?
When asked if a recession could be coming soon, ChatGPT gave me a not so straightforward answer: “Possible–yes. Imminent–unclear.”
While we’re not seeing a sharp decline in economic activity right now, a combination of a tighter economic policy, weaker global growth and consumer fatigue could all be signs of a mild recession toward the end of 2025 or the beginning of 2026.
However, it also suggested that it could be a softer landing for an economy that has had so many question marks over the past several years.
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What Factors Could Contribute to a Recession?
ChatGPT mentioned several factors that could help contribute to a recession. While no single factor could push the economy over the edge, the combined effect of these factors could make things less stable.
- Slowing GDP Growth: Recent data has shown that GDP growth has been slowing. While it hasn’t started contracting, which is a recessionary sign, it is showing a decline. One of the primary causes is a slowdown in consumer spending, which accounts for approximately 70% of the U.S. GDP.
- Persistent Inflation and Fed Policy: Even though inflation has cooled since its record highs in 2022, it remains above the Federal Reserve’s target of 2%. This has caused them to maintain higher rates, putting pressure on businesses and individuals.
- Cooling Labor Market: Job growth has started slowing, especially in tech, real estate and manufacturing. This, along with stagnant wage growth, can signal mounting pressure for low and middle-class families.
- Rising Consumer Debt and Delinquencies: Credit card debt and auto loan delinquencies are increasing, which can put financial stress on low- to middle-income families when combined with limited wage growth.
- Yield Curve Still Inverted: Since 2022, the 2-year/10-year Treasury yield curve has remained inverted. This is a historical recession signal that’s been an accurate gauge for economists.
What Can Be Done To Avoid a Recession?
The goal for the Federal Reserve is to avoid, or at least soften, the economic landing. To do this, ChatGPT said a few things would need to happen.
- Gradually Lower Interest Rates: Interest rates have been decreasing, but at a slower pace than most consumers would prefer due to ongoing inflation. However, this slow reduction is a must to minimize the economic impacts.
- Avoid Overcorrection: Although the Federal Reserve needs to be slow and methodical in reducing interest rates, keeping them too high for too long can risk slowing the economy excessively.
- Communicate Clearly: Economic markets respond to guidance provided by the Fed. When Fed chairman Jerome Powell gives mixed signals, it can negatively affect the markets, meaning his words carry significant weight.
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This article originally appeared on GOBankingRates.com: I Asked ChatGPT If a Recession Is Coming Soon — Here’s What It Said
