Donald Trump’s campaign promises included economic power.
As the stock markets plummet and the businesses hesitate, many Americans are now concerned that the US will be heading into a recession.
The answer to this question is not simple even though the warnings are present.
Trump’s trade policy has caused businesses to feel the pressure. The market is down trillions of dollars, consumer confidence continues to fall, and business are struggling.
Although the economy was booming when Trump took office, his aggressive policy on tariffs has created uncertainty.
If the trend continues, it’s possible that the US is on the brink of an economic downturn which didn’t need to occur.
Markets signaling trouble
In recent weeks, the US stock market saw sharp drops.
The S&P 500 index has dropped more than 3 trillion dollars in value since hitting its all-time peak last month.
Investors react to Trump’s tariff policies that have affected major trading partners including Canada, Mexico and China.
How businesses respond is a major concern. When policies are suddenly changed, companies tend to hold back their spending.
This is exactly what we are seeing now. Small businesses raise prices, delay investments and adjust hiring plans to compensate for higher import costs.
Investor confidence is reflected in the stock market, not by economic indicators. Currently, investor confidence is very low.
What is the state of consumer confidence today?
The US economy is driven by consumers. Businesses suffer, there are job losses, growth is slowed, and the economy will slow down if they cease to spend. Currently, the confidence level is declining.
Only 35% of Americans, according to a recent CNN/SSRS survey, believe that the United States is headed in the right direction.
This is a serious problem. While one survey may not be definitive, it is important to note that consumer confidence drops before recessions.
Stress related to finances is on the rise. The household debt and delinquent auto and credit cards are on the rise.
It is a sign of increasing economic pressure that many Americans struggle to pay their bills.
Spending will be further squeezed if wages do not rise quickly enough, while interest rates are high. This is the type of squeeze which leads to job loss.
What does the public think?
According to the latest survey results, most Americans are not happy with Trump’s economic policies.
Even Republicans have begun to doubt his policies, even though his base is still somewhat loyal.
In a CNN/SSRS survey, 56% of respondents disapprove Trump’s economic handling. This is the lowest rating for his presidency. It is the highest level of disapproval during Trump’s first term.
A Reuters/Ipsos poll echoed similar concerns. The poll found that 57%, including 1 in 3 Republicans, believe Trump’s policies on the economy are “erratic”.
This is a major change from what people thought before the election. Trump’s Republican supporters have been loyal to him for years, but the current trade war and volatility in the market are starting to wear them down.
Separate Emerson College survey found Trump’s approval rating had risen to 45% in just one week.
Tariffs, the cost of living and the fear that the economy will go in the wrong directions are the main concerns.
Are the US really heading towards a recession?
Answer: Not yet, but maybe.
The economy continues to grow. The unemployment rate is low and businesses are still recruiting.
Major banks have begun to raise the alarm. JP Morgan has increased its estimate of the likelihood that a recession will occur in 2025 from 30% to 40%.
Goldman Sachs increased its estimate to 20% from 15%. These aren’t guarantees of a recession, but it shows that the experts are becoming more conservative.
It’s not that the economy has a weakening. Trump’s policies increase the likelihood of a disaster.
When he was elected, the economy was strong. It’s now absorbing unneeded shocks.
Next?
Trump might change his mind. Trump’s policies may be a power play.
Confidence could be restored if he reverses tariffs, and assures the businesses. There’s still no indication that he will do this.
His administration, however, has stated that they are willing to “endure economic pain in the short term” for future gains.
Markets don’t think that these gains are going to happen. Investors believed Trump would intervene if the economic situation deteriorated.
His new message, however, suggests that he is fine with the markets dropping and business struggling.
Republicans could also limit the tariffs that he can impose, but they have not done so yet.
Many people privately disagree with his policy but do not want to publicly criticize him.
This may change, if the economy worsens and people start to blame their elected officials.
The US economy is flirting with recession. The risk is only going to increase if nothing changes.
The post is titled Is America headed towards a self-inflicted economic recession? The first time the public thought about this topic was on The The Daily Hodl
