Connor Lokar, senior forecaster at ITR Economics, weighs the prospects of a recession resulting from the Trump administration’s latest round of tariffs — as well as the probability of a Great Depression occurring in the next decade.

Will the new Trump tariffs bring on a recession? “Not at this point,” Lokar says. While emphasizing the potential damage from an escalating trade war, he believes “we’re OK” at the moment. “I think the economy can still grow, despite some tariff pressure.”

Lokar argues that many sectors of the U.S. economy — single-family housing, inflation-adjusted retail sales, freight volumes, logistics employment and manufacturing — were actually coming out of a recession in 2024. The advent of 2025 saw the economy gaining momentum, he says, with inflation-adjusted income levels rising at a level consistent with 10-year averages. On top of that, the economy had “started to adapt” to higher interest rates.

Prior to the new round of tariffs, ITR was “reasonably optimistic for 2025-26 to eke out some modest growth.” As to whether current events are sufficient to scrap those expectations, “we’re just not there yet.”

Lokar and ITR do believe that tariffs are inflationary, given that they raise imported product costs, which are passed along to buyers. The question, he says, is whether additive pressure from high tariffs is enough to undermine income and consumer-buying trends. Should the year end with inflation at around 3.5% — versus ITR’s projection in the high 2s or low 3s — “I don’t think that kills us.” But with a higher number, all bets could be off.

The tariffs’ impact on manufacturers will vary. “There are going to be winners and losers — probably more losers,” Lokar says. “They’re definitely going to be highly disruptive, particularly to individual companies. But from the highest macro level, I’m not prepared to say it will be fatal.”