What is a recession, and is it tied to stock market declines?

Image By Louis Jacobson | PolitiFact

As markets tumble, experts warn Trump's tariffs could trigger unprecedented "stagflation" recession - here's what that means for you.

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Recession 101: Economic Domino Effect

• Businesses freeze investments
• Unemployment spikes (4.2% → 11% in 1980s)
• Wages stagnate
• Consumer spending plummets
• Economic spiral intensifies

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The Stock Market Myth

Since 1950: 10 recessions, 7 linked to market crashes. But 1987's 28% crash caused no recession. Current S&P 19% drop mirrors 2022's "false alarm".

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Tariff Time Bomb

Unlike typical recessions, tariffs could create 1970s-style "stagflation":
• Prices rise 8-10% annually
• GDP shrinks 2-3%
• Global coordination worsens crisis

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Recession Reality Check

The secretive NBER committee (Harvard/MIT economists) officially declares recessions using:
• Payroll data
• Industrial output
• Consumer spending
• Trade sales
Not stock prices

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FAQs

Q: How long until recession official?
A: NBER takes 4-21 months to declare - fastest was COVID (4 months)

Q: Worst-case scenario?
A: 1930s-style 88% market crash + global trade collapse

Q: Can tariffs be reversed?
A: Yes - economists say quick rollback could limit damage

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