Barclays warns of impending recession due to tariff impacts

The U.S. economy is facing significant challenges related to ongoing trade tensions and rising tariffs under President Donald Trump's administration. In April 2025, reports indicated that despite initial stock market recoveries, the mix of social sentiment and economic data points to a troubling outlook. Barclays has expressed concerns about an impending recession, citing mixed messages regarding tariffs and their repercussions on economic indicators. Notably, consumer sentiment has continued to decline amid worries about inflation, with the University of Michigan reporting an 8% drop in consumer confidence in April, raising fears of decreased consumer spending. Market volatility has increased as major U.S. technology companies reported their first-quarter earnings, with upticks mostly attributed to tech growth, but these gains were overshadowed by the potential long-term effects of Trump's tariffs. Analysts highlight that these tariffs, coupled with the threat of retaliatory measures from other nations, are amplifying risk factors for market dynamics and consumer attitudes toward spending. Intel’s CFO, David Zinsner, emphasized that tariffs increase the likelihood of a recession, warning of a potential economic slowdown as consumers grapple with rising prices. This precarious economic environment has prompted calls from experts for caution in investment strategies. Barclays specifically recommends that investors limit exposure to risk assets, foreseeing a broad economic downturn favoring longer-duration assets. Analysts argue that the historical impacts of tariff policies may gradually emerge, revealing the true economic pain as delayed repercussions begin to take effect. The possible downturn could be exacerbated by challenges in inbound tourism and consumer spending, particularly as households report financial strain and seek to adapt their budgets amid uncertainty. Consumer behavior has shifted, leading individuals to rely more on budget-conscious strategies reminiscent of previous economic downturns, echoing sentiments from millennials who faced similar economic strife during their formative years. Millennials are now providing guidance to Generation Z, encouraging frugal living and saving practices in anticipation of possible recession conditions. The confluence of these economic indicators—trade tensions, consumer sentiment declines, and expert analyses—paints a troubling picture of potential challenges ahead for both the U.S. economy and global markets.