Is the U.S. in a Recession? What Actually Gets Cheaper When the Economy Slows

When the economy takes a hit, not everything gets cheaper the same way. Is the US in a recession? That’s the million-dollar question right now. While the traditional definition says two quarters of GDP decline marks a recession (which technically happened in summer 2022), economists still debate whether we’re in one now or headed there soon. Either way, understanding which prices actually drop matters if you’re planning major purchases.

Which Prices Actually Fall During Downturns

Here’s the real deal: when people have less money in their pockets, they cut back on wants first, then needs. Travel, entertainment, and luxury items typically see price drops because demand simply vanishes. But essentials like food and utilities? Their prices stay surprisingly sticky because people still need them no matter what.

The story’s different for big-ticket items. Home prices usually decline when a recession hits. Markets like San Francisco, San Jose, and Seattle have already seen drops of 7-8% from their 2022 highs. Some analysts predict home prices could fall by 20% across over 180 U.S. markets — which is why recessions are historically good times to buy real estate.

The Exception: Prices That Won’t Drop This Time

Here’s where is the US in a recession question gets complicated. Gas prices might fall (they dropped 60% to $1.62 per gallon during 2008), but probably not like before. Why? External factors like global conflicts keep supply tight. Plus, gas is essential — people still drive to work and buy groceries regardless of the economy.

Car prices are the real surprise this cycle. Normally, inventory piles up and dealers slash prices to move stock. Not happening now. Supply chain chaos left dealers with less inventory than demand, so prices skyrocketed. Even if a recession hits hard, dealers won’t be forced to negotiate much. “There’s not going to be a lot of inventory forcing dealers to negotiate with you,” warns Cox Automotive’s senior economist.

Your Move: Should You Buy in a Downturn?

Yes — if you have cash. Recessions create opportunity for people positioned right. The play is to move assets into liquid cash before things get weird, then deploy it when prices actually drop. Real estate and big purchases are prime targets.

The bottom line: Is the US in a recession? Probably heading there based on analyst predictions. Some sectors will see real discounts, others won’t budge. Do your homework on local market conditions before making moves.