Are We in a Recession? Assessing the U.S. Economy and Housing Market in May 2025

In partnership with

As of May 2025, the U.S. economy is navigating significant turbulence, prompting widespread debate over whether the nation has entered a recession. While official indicators have yet to confirm a recession, recent developments suggest the economy is under considerable strain.

Economic Indicators and Market Volatility

In early April, President Donald Trump announced sweeping tariffs on a broad range of imports, marking what he termed "Liberation Day." This move intensified trade tensions globally, leading to a sharp decline in investor confidence. The Dow Jones Industrial Average plummeted by 4,000 points over two days, and similar downturns were observed in international markets.

The International Monetary Fund (IMF) has revised its global growth forecasts downward, citing increased trade tensions and financial market volatility. Although the IMF does not predict a global recession, it acknowledges the heightened risks facing the U.S. economy.

Investor Sentiment and Consumer Confidence

Investor anxiety is palpable, with a significant portion expressing concerns about a potential recession. A recent survey indicates that while many investors are worried, a majority are maintaining their current investment strategies, opting to ride out the volatility rather than liquidate assets.

Consumer confidence has also taken a hit. The University of Michigan's survey reflects a notable downturn in sentiment, with pessimism regarding jobs, income, and inflation becoming more prevalent.

Housing Market Dynamics

The housing market, which had been showing signs of recovery, is experiencing renewed challenges. The recent tariff announcements have led to a spike in mortgage rates, reversing a six-week trend of declining rates. This increase has resulted in a 5% drop in home purchase volumes and an 8.5% decrease in mortgage applications.

While the U.S. has not officially entered a recession, the convergence of aggressive trade policies, market volatility, and declining consumer confidence suggests the economy is facing significant headwinds. The housing market's recent setbacks further underscore the challenges ahead. Stakeholders should monitor these developments closely, as the coming months will be critical in determining the trajectory of the U.S. economy.

Find out why 1M+ professionals read Superhuman AI daily.

In 2 years you will be working for AI

Or an AI will be working for you

Here's how you can future-proof yourself:

1. Join the Superhuman AI newsletter – read by 1M+ people at top companies

2. Master AI tools, tutorials, and news in just 3 minutes a day

3. Become 10X more productive using AI

Join 1,000,000+ pros at companies like Google, Meta, and Amazon that are using AI to get ahead.

Sign up and start learning AI