Concerns about tariffs and layoffs are driving up the likelihood of a U.S. recession. Investors are reflecting this sentiment, with the S&P 500 pointing to a 21% chance of economic downturn.

Analysts often use the current percentage change in the S&P 500 index to gauge the likelihood of an impending U.S. recession, given historical trends. On average, the S&P 500 index has dropped about 31% during the last ten recessions. This statistic serves as a benchmark for predicting economic downturns, as significant declines in the stock market are often correlated with recessions.

Image: J.P. Morgan