The U.S. economy is showing recession symptoms, even if the official label hasn’t been applied. The data is moving in one direction. Real consumption is falling. Housing is rolling over. Payrolls are being revised down. Construction is contracting. And the labor market is sending mixed signals that don’t add up.
Start with consumption. Real personal consumption expenditures fell 0.1% in May. That’s the second decline in three months. Disposable personal income dropped 0.6%. Real disposable income fell 0.7%. Personal income overall declined by 0.4%, the sharpest drop since early 2021. These are not seasonal blips. They’re trend breaks. The savings rate dropped to 4.5%, down from 4.9% in April. Consumers are pulling back, not because they want to, but because they have to.
Housing is in retreat. Residential investment fell in Q1 and is tracking lower again in Q2. Zillow reports that home prices are now declining in over 60% of U.S. counties. Nationally, prices are down 0.7% year over year. Inventory is up nearly 20% from last spring. Time on market has stretched to 17 days, four more than last year. Price cuts are hitting 26% of listings. The market is no longer tight. It’s softening fast.
Construction spending dropped 0.3% in May. That’s the second straight monthly decline. Residential construction fell 0.5%. Nonresidential dropped 0.4%. Public construction was flat. The annualized rate is now $2.138 trillion, down 3.5% from a year ago. That’s the weakest year-over-year print since 2020. The slowdown is broad. Private construction is down. Public spending is barely holding.
The labor market is where the signals get messy. The establishment survey keeps printing positive payroll numbers. But the household survey shows a different picture. There were 622,000 fewer people employed in May than in January. That’s not noise. That’s a reversal. Construction payrolls were revised down in every month from January through April. May’s construction jobs print was 139,000, but that number will likely be revised lower too. It always is.
JOLTS showed 7.7 million job openings in January. That was 400,000 more than expected. But the hires rate hasn’t moved. It’s stuck at 3.4%. Quits are flat. Layoffs are creeping up. The openings are there on paper. But they’re not translating into hires. That’s a red flag. Either the jobs are fake, or the labor market is freezing.
GDP contracted 0.3% in Q1. That’s already in the books. Q2 is tracking flat to slightly negative. If that holds, the U.S. will have posted two straight quarters of negative growth. That’s the textbook definition of a recession. The only thing missing is the official call.
Sources
https://www.bea.gov/news/2025/personal-income-and-outlays-may-2025
https://www.realtor.com/research/luxury-2025-outlook/
https://www.zillow.com/home-values/102001/united-states/