As economic headlines grow more cautious, many Americans are beginning to feel a sense of unease about where the economy is headed. Despite continued strength in consumer spending and job growth, sentiment surveys reveal growing concern about a potential downturn. So when will the data catch up with these fears?
According to several economists, we may begin seeing clearer signs of a slowdown by mid-to-late summer. While current economic indicators— like retail sales and durable goods orders— remain relatively strong, analysts suggest this strength may not last.
A Lag Between Sentiment and Statistics
Historically, when an event triggers an economic slowdown, it takes about four months for measurable data to reflect that shift. That’s according to a recent analysis by Goldman Sachs, which reviewed 45 key economic indicators. In the current case, elevated tariffs are expected to play a significant role. Former President Trump’s latest increase in the effective U.S. tariff rate— now at its highest level in a century— is expected to drive up prices and cool demand.
Goldman Sachs economists now estimate a 45% probability that the U.S. will enter a recession within the next 12 months— significantly higher than the historical average of 15%.
“We will likely see continued softness in the survey data before the hard data start to weaken around mid-to-late summer,” wrote Goldman Sachs economist Emanuel Abecasis. “At that point, higher prices, weaker spending, and slower hiring could start to emerge in the official statistics.”
Signs of Strain Beneath the Surface
Though recent economic data has surprised to the upside— with retail sales posting their biggest monthly gain in nearly two years and durable goods orders soaring over 9% in March— some experts believe this momentum is temporary. They point to a common pattern in “event-driven” slowdowns: consumers and businesses often accelerate spending in anticipation of cost increases, only to cut back sharply afterward.
Gregory Daco, chief economist at EY, explained it this way: “If you’ve stocked up your inventory now, you’re unlikely to place the same order again next month. That sudden pullback can cause a sharp dip in overall economic activity.”
Auto sales offer a clear example. In response to impending tariffs, sales jumped 5.3%. But economists say that spike is unlikely to continue, and a drop-off may follow in the coming months.
Early Indicators of a Slowdown
Some warning signs are already emerging. Shipment volumes at the Port of Los Angeles— a key hub for U.S. imports— have been declining, with incoming traffic expected to fall 44% through early May. According to RSM chief economist Joe Brusuelas, this reduction in supply could soon translate to higher prices, lower disposable income, and ultimately, less consumer demand.
“In June, what that means is there’ll be fewer goods on shelves,” said Brusuelas. “Less goods equals higher prices. At a time when inflation goes up, that means less disposable income, less demand.”
While traditional indicators like unemployment claims haven’t yet risen, economists caution that these may be lagging signs. As business orders slow, layoffs may follow, further weighing on consumer confidence and spending.
Brusuelas adds, “At best, [the economy] is going to grind to a halt. At worst, we’re going to be in a recession— a mild, garden-variety one that could last six to nine months.”
What This Means for Retirees and Pre-Retirees
At Market Advisory Group, we’re closely monitoring these developments and their potential impact on retirees and those approaching retirement. If a slowdown does occur, it could affect everything from investment performance to inflation-adjusted income and long-term financial security.
Now is an important time to revisit your financial plan. Whether it’s adjusting your withdrawal strategy, reviewing tax exposure, or building a buffer for inflation, proactive planning can help you stay confident in the face of economic uncertainty.
If you’re concerned about how a changing economy could affect your retirement, we invite you to connect with our team of financial professionals for a one-on-one consultation.
The commentary on this blog reflects the personal opinions, viewpoints, and analyses of the author, Katherine Sullivan. Katherine Sullivan is not an investment adviser representative of Foundations. However, Foundations does have an investment adviser representative at Market Advisory Group. This content should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), nor as a reflection of the performance returns of any Foundations client.
The views reflected in the commentary are subject to change at any time without notice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security, or any security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Foundations deems reliable any statistical data or information obtained from or prepared by third party sources that is included in any commentary, but in no way guarantees its accuracy or completeness.