Are We in a Recession?

According to a traditional definition, the U.S. is not currently in a recession — but fears are rising.

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Edited by other Updated May 28, 2026 Updated on May 28. Updated on May 28. The United States is not currently in a recession, although warning signs are mounting. The U.S. economy was less than robust even before the United States and Israel attacked Iran on Feb. 28, setting off a wider-scale conflict in the Middle East. The war has disrupted energy supplies for much of the world, sending prices for gas and jet fuel soaring. Other trouble signs include: Stubbornly persistent inflation. A stagnant job market. Plummeting consumer confidence. While a ceasefire was established in April, both sides have been accused of violating it, and negotiations to end the war continue. But even if it ends soon, its effects are already moving through the economy. Tariffs have roiled global trade in the past year and the ongoing war in Iran has raised new worries, but the U.S. is not currently in a recession, according to a traditional definition. Most recently, the U.S. economy suffered a deep but very short recession at the onset of the pandemic in 2020, according to the National Bureau of Economic Research. In fact, it is the shortest on record, lasting only two months, March and April, before giving way to an expansion that began in May that year. That expansion has since stumbled at times, and inflation has been persistent even after coming down from its peak of 9.1% in June 2022. Economic growth was sporadic in 2025, and was actually negative in the first quarter before rebounding strongly in the second and third quarters, then slowing to a 0.5% annual rate in the fourth quarter. In the first quarter of 2026, GDP rebounded to a 1.6% annual growth rate.

The definition of a recession

Essentially, a recession happens when growth stops and the economy begins to shrink. The conventional benchmark has been that two consecutive quarters of a generally slowing economy defines a recession. A depression is also an economic contraction, but is generally defined as being longer and more severe, with economic impacts that are more widespread.

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How long do recessions last?

Historically, recessions have lasted anywhere from months to several years, according to the National Bureau of Economic Research. Some recessions are mild and may end quickly, while others have lingering effects even after they’ve technically ended. The recession during the covid lockdown in spring 2020 lasted only two months. The longest U.S. recession ever began in 1873 and lasted more than five years. The Great Depression was the second longest, lasting from 1929 to 1933. Since 1948, the so-called start of the modern era, there have been 12 recessions. The most defining recession of the 21st century was the Great Recession, which began in 2007 and ended in 2009.

Will there be a recession in 2026?

President Donald Trump’s tariff actions, beginning in spring of 2025, disrupted global trade and sparked several recession predictions, but in the end a recession was avoided. The war in Iran is generating new fears of a potential global recession. Here is a sampling of those who have addressed the possibility of a recession.

International Monetary Fund (IMF)

The IMF releases its extensive World Economic Outlook twice annually. Its most recent report, released in April 2026, noted that the global economy had weathered “higher trade barriers and elevated uncertainty” in 2025, but is now challenged by the war in the Middle East. The report projected slower growth and higher inflation in 2026, and raised the possibility of a global recession under certain “severe” scenarios stemming from the conflict.

Mark Zandi, Moody’s Analytics chief economist

Moody’s Analytics Chief Economist Mark Zandi says that a reliable indicator of recession risk, called the “Vicious Cycle Index,” was triggered in January 2026 — raising the possibility that the economy is already in recession. “It could still be wrong,” Zandi wrote on LinkedIn. “These are highly unusual times and we have yet to see consumers pull back significantly or businesses begin widespread layoffs.” Nevertheless, economists are concerned about the labor picture, and are watching business cycle data closely.

Consumer sentiment measures

Fears of a recession can actually be self-fulfilling, as consumers spend less when they have concerns about their finances. The Index of Consumer Expectations from the University of Michigan, one of the most frequently cited consumer sentiment measures, hit an all-time low of 44.1 in the May 2026 report. It was 71.7 at the start of 2025 and was regularly in the 90s or above before the pandemic. Meanwhile, about two-thirds of Americans (65%) believe the U.S. economy will enter a recession in the next 12 months, according to an April NerdWallet survey conducted online by The Harris Poll. Banks and investment houses sometimes publish their own assessments of recession risk. Goldman Sachs raised the probability of a U.S. recession in the next 12 months to 30% in its most recent update in March 2026.

Learn more about recessions

Find out how recessions can impact your money and how to manage your risk. What is a recession? How to prepare for a recession Is a recession coming? How to prepare your portfolio Looking for recession-proof stocks? Find the outperformers What to invest in during a recession: 4 ideas Do interest rates go up or down in a recession? The Federal Reserve’s rate actions are intended to tame whatever factors are influencing economic conditions. When inflation rises, the Fed raises the federal funds rate in order to slow consumer spending. When there is a recession, or even a threat of a recession, the Fed may lower interest rates in order to stimulate the economy. That’s because the federal funds rate impacts interest rates for things like mortgages, auto loans and credit cards. The lower the interest rate, the more appealing the product is for consumers. But interest rate cuts are not intended to bring about a recession. The Fed raised rates from March 2022 to July 2023. The Fed cut rates at its September, November and December 2024 meetings in response to an economy that has leveled out — not because a recession is nigh. Since its January meeting, the Fed has kept the rate steady at 4.25% to 4.5%. » MORE: What is an emergency rate cut? » MORE: Do home prices go down in a recession? A number of factors go into the price of homes, but during a recession they generally go down. That’s largely because home prices are impacted by supply and demand — when demand is weaker, sellers often lower prices to entice home buyers. Demand is weaker for homes during a recession because people are less likely to want to make large purchases. However, home price slashing doesn’t always happen during a recession. During the 1990 recession home prices were stagnant and then declined slightly. In the 2001 recession, home prices increased. During the Great Recession, home prices dropped significantly. Finally, during the brief coronavirus recession in 2020 housing prices began to rise then skyrocketed in the aftermath. Do mortgage rates drop in a recession? Like home prices, mortgage rates tend to drop during a recession largely due to a decrease in demand among buyers. The rates also tend to decline in reaction to federal funds rate cuts by the Federal Reserve, which often happen during a recession in order to stimulate the economy. » MORE: How the federal reserve affects mortgage rates » MORE: Do food prices go down in a recession? Food prices are inherently volatile. They’re subject to consumer demand, supply-chain disruptions, geopolitical strife, tariffs on foreign imports, weather and disease. During a recession food prices tend to drop to entice consumers to make purchases. During the Great Recession, for example, the purchase of sale items rose dramatically, according to a 2015 analysis by the National Bureau of Economic Research. Food prices are currently higher than they were before the coronavirus pandemic. Inflation has slowed since 2022 highs, but prices remain elevated for food overall. However, food prices for individual items tend to move differently depending on outside factors. Egg prices, for example, have risen primarily due to the avian flu. Meanwhile beef prices have been impacted by drought, high grain prices and rising operating costs due to high interest rates. Do treasury bonds go up in a recession? Treasury bonds fluctuate in response to the federal funds rate and short term interest rates. During a recession, interest rates typically drop. In response, bond prices increase while bond yields decrease. In other words, when the price of bonds increases, bonds will earn less. As you might expect, investors are typically less inclined to purchase bonds when they’re more expensive and yield less. Inversely, during periods of economic growth bond prices will decrease — making them more affordable — and the yields will increase, which means the bonds will earn more.

Getting ready for a recession

Right now, the nation has not tipped into recession — and certainly not a depression, either. A depression is an extended economic breakdown, and we have not seen signs of that kind of pain. (See recession vs. depression.) » MORE: How is the economy doing? » MORE: But economic declines begin before a recession is declared official. In other words, we may feel a recession before we know we’re in one. Economic cycles are impossible to predict, so it's best to be financially prepared. There are a few ways to deal with current economic challenges and prepare for future ones. Starting or beefing up an emergency fund can help you face financial setbacks without going into debt.Now may also be the appropriate time to look closely at your expenses, adjust your spending and explore resources to get help paying bills. Explore more on About the author Helhoski Anna Helhoski is a senior writer covering economic news and trends in consumer finance at NerdWallet. She is an on-air contributor and producer of Money News segments for NerdWallet's Smart Money podcast. She is also an authority on student loans. She joined NerdWallet in 2014. Her work has been syndicated in news outlets nationwide including The Associated Press, The New York Times, The Washington Post, The Los Angeles Times and USA Today. She previously covered local news in the New York metro area for the Daily Voice and New York state politics for The Legislative Gazette. She holds a bachelor's degree in journalism from Purchase College, State University of New York. Published in Average and Median Net Worth by Age: How Do You Compare? 7 Ways to Get Financial Help From the Government How to Budget Money in 5 Steps How to Make Money Online, Offline and at Home Legit Ways to Get Fast Cash (Without Selling Plasma) By Tommy Tindall, Lauren Schwahn How to Lower Your Bills: 45 Ways to Save By Kelsey Sheehy, Laura McMullen, Tiffany Curtis How Is the Economy Doing Right Now? By Anna Helhoski How to Prepare for a Recession By Anna Helhoski, Pamela de la Fuente Emergency Fund Calculator: How Much Will Protect You? By Margarette Burnette