What is a recession and the American economy in the direction? Here's what economists say.

President Trump aroused concerns this week when he refused to exclude the possibility of an American recession this year. Asked about Fox News if he expects such a crisis, Mr. Trump said: “I hate predicting things like that. There is a transition period because what we do is very big.”

US Secretary of Commerce Howard Lutnick also seemed to leave the possibility of a slowdown on Tuesday, telling CBS News in an interview that Mr. Trump's economic policies “are worth it” even if they led to a recession.

Although it is notoriously difficult to predict a recession, there are final criteria that must be met for an economic cycle to be considered a recession. Here's what you need to know.

What is a recession and who decides if we are in one?

A recession is generally defined as a broad and persistent decline in economic activity. The most popular metric is that a recession is two consecutive quarters of negative economic growth, although there is more than.

References are identified by the National Bureau of Economic Research (NBER), a non -profit non -profit research group which dates from American commercial cycles. To determine if the economy has entered a recession, the NBER assesses six key indicators: real personal income; Non -agricultural payroll use; employment as measured by the household survey; personal consumption; Manufacturing and commercial sales; and industrial production.

More specifically, Nber examines the depth of changes in these indicators, the way in which a collapse affects different industries and the duration of a slowdown. The result: in a recession, the drop in economic activity must be significant, sustained and widespread, rather than limited to a particular sector.

Could the United States fall into a recession of any time?

For the moment, economic data suggest that this is unlikely. Although dismissals across the country are increasing, the US labor market continues to create jobs to a decent clip. Despite the slowdown in economic growth, it should not fall from a cliff. In fact, Julia Pollack, chief economist of the ziprecruitic career site, notes that four of the six signals followed by the Nber does not to a continuous economic expansion.

“Currently, things seem uncomfortable given the significant amount of the uncertainty of policies, federal layoffs, and we have seen the feeling of business, consumers and investors,” said Ryan Sweet, American chief economist at Oxford Economics, in CBS Moneywatch. “So, for some, I have the impression that the economy is in recession, but we are not there yet.”

However, cracks appear that could predict a sharper slowdown on the road. Retail expenses, which are the vital element of the economy, is declined, while measures of consumer confidence show a strong deterioration recently. The concerns of investors concerning the Trump administration's prices dam on other nations have also criticized equity prices, which could put pressure on expenses.

“Negative consumption is worrying because consumption spending is the backbone of the US economy,” said Pollack. “And it is not only that spending has dropped. The feeling has fallen, household budgets are in a hurry and consumers are more vulnerable to shocks, which has increased recession fears.”

Sweet has added: “At the moment, your traditional causes of a recession are not flashing in red, but we simply have this suffocating effect of all the uncertainty concerning trade and fiscal policy and immigration.”

Lutnick, the head of the trade department, defends Mr. Trump's economic policies, saying that they will stimulate economic activity.

“The only reason for which there could be a recession is that the Biden nonsense with which we had to live. These policies produce income. They produce growth. They produce factories built here,” he told CBS News on Tuesday.

What signals would a recession indicate?

The clearest sign would be a regular increase in job losses and jump unemployment. In a recession, consumers evaluate spending and businesses are retreating to investments. This usually leads to a slowdown in hiring and increased layoffs.

The Secretary of Commerce says that Trump's policies are worth “the trouble” even if they lead to the recession 04:20

The country's unemployment rate reached last month, 4.1% compared to 4%, although it is still quite low. But employers have added 151,000 jobs, a sign that companies are still trying to hire workers and enough payroll gains to keep unemployment in check.

Many economists monitor the number of people looking for unemployment benefits each week, a gauge that indicates whether the layoffs aggravate. Hy -on -employed weekly complaints remain low.

Who is the most vulnerable in a recession?

Most Americans would feel the impact of a recession in one way or another, for lower hiring to lukewarm salary earnings. Among the employed people, those who entered the labor market tend to be the first to lose their jobs in a recession, noted Alex Jacquez, head of the Policy and Defense of the Groundwork Collective, a left -wing economic reflection group.

“So you see that people who are most difficult to reach as we reach full employment are the first to be dismissed. This includes low-wage workers, black workers, Latin workers. Those who have the most difficulty finding a job when times are good are the first to lose jobs when times are bad,” he said.

Americans who carry debts on their house and cannot make minimum payments can also face previews in a slowdown, locking a generation of the construction of household wealth.

“This is one of the reasons why the recessions are so damaging, because the least of us are injured the most when slowdowns come,” said Jacquez.

The Associated Press contributed to this report.

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Megan Cerullo

Megan Cerullo is a journalist based in New York for CBS Moneywatch covering small businesses, the workplace, health care, consumer spending and personal finances. She appears regularly on CBS News 24/7 to discuss her reports.

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