The word “recession” has seen its highest interest since 2022, according to Google Trends.
The stock market has experienced increased volatility recently, partially thanks to President Donald Trump leveraging tariffs, according to the International Monetary Fund. The IMF said the level of tariffs proposed has not been seen in a century and the economy is in a “highly unpredictable environment.”
“We’ve had some volatility in the last couple of weeks, and it really has to do with the potential imposition of tariffs pretty much, on a global scale,” Associate Professor of Finance and Economics Timothy Zimmer said. “And at the last minute, they decided to pause them for, I believe it was 90 days. And so they didn’t impose those tariffs.”
Zimmer noted tariffs on China were not postponed. However, China was the third largest trading partner with the U.S. in February, according to the U.S. Census Bureau.
“I feel like we’re currently on a downward trend, and we’re kind of nearing levels of the global Great Depression back in the late 1920s, early 1930s,” sophomore history major Addie Hayes said. “I say that because the current tariff situation is really reminiscent of the Smoot-Hawley Act, which, as some people may know, was very bad for our economy. So I feel as if that if we continue on this trend, it will only get worse.”
Consumer sentiment about the economy dropped in 2020 and has yet to return to pre-pandemic levels, according to University of Michigan Consumer Sentiment via FRED. In June 2022, consumer sentiment reached its lowest level since records started being kept in 1952. Despite unofficially experiencing an economic downturn since 2020, consumer sentiment is on the decline again.
“I feel like in the past four years of having to spend money in this economy, I feel like it’s definitely been getting a little bit worse,” Hayes said. “When I first started driving, gas prices weren’t that bad. But oh my gosh, I am literally giving like all of my limbs to get gas.”
Junior computer science major Ethan Lohman said the economy has been in a long, drawn out recession since COVID. He added that if the economy is experiencing recession, it would likely not be known until after it has concluded.
Zimmer said the poor sentiment about the economy started when a major bank came out and said the economy had a 50/50 chance of going into recession, referring to when Morgan Stanley CEO James Gorman gave those chances in June 2022 in a meeting with a conference hosted by Morgan Stanley, according to Reuters.
In 2022, it was not tariffs causing concerns — it was inflation. In June, the inflation rate was 9.1% according to the U.S. Bureau of Labor Statistics. The average price of a gallon of gas was $5.03 in June 2022, according to the U.S. Energy Information Administration. Inflation rates are calculated year over year. In June 2021 the average price for a gallon of gas was $3.15, according to the U.S. Energy Information Administration. Right now, prices are around the $3 mark. Zimmer said the federal reserve prefers to keep inflation around 2%, right now it is sitting at 3% and will not go any lower, despite higher interest rates which are used to combat inflation.
“That’s been kind of a persistent theme that we’ve seen, and it’s really kind of tied the hands of the federal reserve,” Zimmer said. “Because some people, some policy makers, have suggested they lower rates, especially during that turmoil in the stock market recently and they’ve been reluctant to do that because they are concerned about a small measure of persistent inflation.”
Recessions have impacts on the job market, according to Zimmer. He said the number one concern of people graduating in the next couple of years will be the state of the economy and the job market. Employers will tighten up on how many hires they bring in. Even though students have no control over the economy when they graduate, Zimmer said graduating in a robust economy is key.
The job market is already competitive, and when places tighten up hiring, the difficulty level of finding an entry level position increases, Zimmer said. Recent graduates with minimal experience will be competing with each other along with more experienced candidates for the same roles.
An official economic downturn will also have an effect on people seeking internships. Zimmer said the number of paid internship opportunities will decrease if the economy does go into recession.
“I think the economy being affected is a really bad thing,” Lohman said. “You don’t want to be miserable during it because you have to sacrifice your own comfort, which is unfortunate. We don’t want to do that, I don’t want to do that, but it is just what has to happen to be able to live, and you just got to look towards a better day.”
Zimmer stressed that the economy is unofficially in recession right now. However, public perception about the economy has continued to decline.
