7 Signs the Economy Is Weakening—And a Recession May Be Next

For months, mainstream pundits have insisted the economy is “resilient,” that inflation is under control, and that growth is holding steady. But beneath the surface, warning signs are flashing—and fast. While Washington bureaucrats continue to spin the data, a growing number of respected economists and business leaders are sounding the alarm: a recession may be closer than most Americans realize.

Here are 7 key indicators that suggest the U.S. economy may be headed for rough waters.

1. Slowing Job Growth and Rising Unemployment

The U.S. labor market is starting to crack. In July 2025, the economy added just 73,000 jobs, well below the 100,000 forecasted. Even more alarming, June’s and May’s job numbers were sharply revised downward, revealing far weaker hiring than initially reported.

The unemployment rate has now crept up to 4.2%, and jobless claims are trending higher. These are not isolated hiccups—they’re the kinds of labor market shifts that have historically preceded recessions.

2. Weak Consumer Spending, Especially on Durable Goods

While overall spending ticked slightly higher in June, the details are troubling. Purchases of durable goods—big-ticket items like appliances and cars—have dropped by $40 billion since April. Meanwhile, services spending is slowing, a sector that had propped up economic growth earlier in the year.

With inflation still eating into paychecks and credit card debt hitting record highs, the average American household is clearly feeling the squeeze.

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3. Consumer Confidence Is Fading

Recent surveys show consumer sentiment is falling again, with Americans growing increasingly concerned about inflation, energy prices, and economic instability. When people lose faith in the future, they stop spending—and that leads to contraction.

“When consumers lose confidence, they stop spending—and that’s when the economy stalls,” said Rich Jacoby, CEO of GoldenCrest Metals. “We’re seeing more Americans move their money into safe-haven assets like gold because they no longer trust what’s coming next. That shift in mindset is one of the clearest recession warnings you can get.”

In other words, when Main Street starts acting defensively, it’s often because they see trouble ahead—even if the media won’t admit it.

4. Yield Curve Inversion

One of the most reliable recession predictors in modern history is the inverted yield curve—a situation where short-term interest rates are higher than long-term ones. This signals that investors expect slower growth or even contraction ahead.

The yield curve has been inverted for months now, and every U.S. recession since the 1970s has been preceded by this exact pattern.

Related: How to Protect Your Retirement Savings with Physical Gold and Silver

5. Leading Economic Indicators Are Falling

The Conference Board’s Leading Economic Index (LEI)—a collection of forward-looking economic metrics—has been declining for over a year. In fact, its six-month growth rate has fallen below –6%, well past the –4% threshold that typically signals a recession.

This isn’t just one weak data point. It’s a basket of indicators—from new manufacturing orders to consumer expectations—saying the same thing: the economy is slowing down.

6. “Stagflation-Lite” Is Setting In

While inflation has cooled from its peak, it’s still well above the Fed’s 2% target. June’s PCE inflation came in at 2.6%, and core inflation remains sticky. Meanwhile, GDP growth is slowing, and job creation is falling.

This dangerous combination of high inflation and slowing growth is eerily reminiscent of the 1970s—a time of stagflation that punished savers, crushed small businesses, and upended the American middle class.

7. Corporate Strain and Business Pullback

Beneath the headline numbers, U.S. businesses are feeling the pressure. Manufacturing jobs are shrinking, layoffs are rising, and corporate investment is slowing as executives grow more cautious. Small businesses—already dealing with tighter lending conditions and high input costs—are bracing for impact.

Another growing concern? Rising tariffs.

The current administration’s escalating tariff policies, especially those targeting imports from China, are driving up costs for U.S. manufacturers and small businesses. From construction materials to tech components, supply chains are absorbing new price hikes—costs that eventually trickle down to consumers.

While tariffs can be effective negotiating tools, conservative economists warn that deploying them during a fragile recovery risks backfiring—fuelling inflation, stifling trade, and slowing business expansion at the worst possible time.

With tighter margins, increased regulatory burdens, and inflation still lingering, many business owners are pulling back on hiring, spending, and future planning—classic recessionary behavior.

Recession Risk Is Rising

While the Biden administration spent years bragging about “Bidenomics,” the sugar high of post-COVID stimulus is long gone. What’s left behind is a bloated federal budget, sky-high debt, rising tariffs, and a fragile labor market.

Many conservative economists now believe the U.S. is entering a late-cycle slowdown—and possibly worse. JPMorgan recently pegged the odds of a recession by the end of 2025 at around 40%, while others warn it could be much higher.

What You Can Do Now

Regardless of whether the recession arrives in 3 months or 12, this is the time to prepare:

• Boost your emergency savings
• Cut unnecessary expenses
• Avoid new debt
• Diversify your assets—including inflation hedges like gold and silver
• Stay alert to government policy changes that could affect taxes, trade, or interest rates

You don’t need a Ph.D. in economics to see that the current system is unstable. Americans are working harder, spending more, and falling further behind. Whether it’s the Fed’s failed policies or decades of reckless government spending, the foundation is shaky.

The signs are there. The only question is—will you be ready?