Donald Trump, president of the United States, has been making hyming about the US economy’s performance since taking office in January.
“In the first four years, we had the greatest economy in the history of our country”, Trump (falsely) said on April 17 while meeting with Italian Prime Minister Giorgia Meloni. In his first term, which will run from 2016 to 2020, he continued, “I think we’re going to do even better this time.”
He  stated at a Cabinet meeting on March 24 that “we have numbers and job generation that I don’t think we’ve ever seen before.” See how it works out, but I think the economy is going to go through the roof”.
Trump hasn’t gathered enough economic data to be elected. The employment and inflation data available are encouraging. Other measurables, though – consumer confidence, business expectations, inflation forecasts and the stock market – show widespread concern about where the US economy is headed under his policies, especially his sharp tariff increases. And the US suffered the worst stock market decline since 1932, when the country was hit by the Great Depression.
Since January, there have been 345, 000 jobs, which is up from the previous year’s rate. The unemployment rate is 4.2 percent, a low level by historical standards, and initial unemployment claims are holding steady. In addition, inflation, one of Trump’s key 2024 campaign themes, has dropped from 3.0 percent in January to 2.4 percent in March.
Consumers and businesses expressed concern that Trump’s tariffs will raise prices, bring on a recession, or both in a number of long-running surveys. Economists consider these metrics as barometers of how well the economy will perform in the near and medium term.
According to Douglas Holtz-Eakin, president of the center-right American Action Forum, “everything is bad, even though it hasn’t yet bled through the hard data.”
Business owners claim to already feel the pinch.
David Dennison, director of the Original Pancake House restaurant chain in suburban Washington, DC, said costs have increased by more than 20 percent on food items such as oranges, peppers, avocados and tomatoes.
“We anticipate that significant price increases will be experienced by equipment failures, parts, and new equipment,” Dennison said. The most concerning aspect of our equipment’s upcoming difficulties is, “… sourcing parts for our equipment.
Worried consumers and skittish businesses could produce a slowdown in spending, investment, sales and employment growth, meaning bad vibes could become a self-fulfilling prophecy, said Dean Baker, co-founder of the liberal Center for Economic and Policy Research.
Consumer opinion is declining.
Both surveys have been measuring consumer confidence for Trump’s first 100 days, and neither one has changed in decades.
The University of Michigan Consumer Sentiment survey, which measures consumer optimism about the economy, has dropped every month since December 2024. The April reading of 52.2 is a 29 percent decrease from December 2024. The inflation rate in mid-2022, which had been at a 40-year high, was lower than it was for all but two months of Joe Biden’s presidency.
The other long-running survey is published by the Conference Board, a business research group. On Trump’s watch, this metric has also decreased monthly, with the current reading 15 percent lower than it was in December 2024.
This is in line with other polls. For the first time since at least 2001, the pollster Gallup found that more than half of Americans say their financial situation is getting worse. The figure of 53% for April is higher than the maximum of 49 percent it was during the Great Recession of 2008 to 2009.
Small businesses, who have historically been anti-tax and anti-regulatory and had high hopes for Trump’s agenda, also show declining confidence under Trump.
The National Federation of Independent Business survey of small business optimism has dropped every month since December 2024 and decreased more than 7 percent since then.
Expectations of inflation are rising rapidly.
The expectation that Trump’s tariffs will raise consumer prices is one of the main factors lowering consumer confidence.
Every month, the University of Michigan survey asks consumers about their inflation expectations for the coming 12 months. Consumer expectations for the upcoming year’s inflation rate have increased significantly, from the previous year’s forecast of 2.8% year-over-year inflation to 6.5% in April.
According to a Federal Reserve Bank of Atlanta analysis every month, businesses feel the same way. In December 2024, the study found that 32 percent of businesses said they expected “significant” or “very significant” price increases over the next 12 months. That percentage had increased by 46% by April.
Additionally, manufacturers were questioned about their current spending patterns by a Federal Reserve Bank of Philadelphia survey. The survey found a growing number of businesses that say they are paying more and a declining number saying they’re paying less. The gap increased from 26.6% in December to 51% in April.
The outlook for economic growth is declining.
Every quarter, the Atlanta Fed releases GDPNow, a forecast of how much growth is expected in the nation’s gross domestic product (GDP) – the sum of all economic activity within the country – by looking at the upward and downward movement of key economic inputs.
GDPNow has turned negative, with a projected annualized GDP shrinkage of about 2.5 percent for the first quarter of 2025, the first projected shrinkage the model has seen since the second quarter of 2022.
This corresponds to independent estimates of the recession’s likelihood. JP Morgan Research says there’s a 60 percent chance of a recession during the next year, Goldman Sachs puts it at 45 percent, and the International Monetary Fund pegs the likelihood at 37 percent.
The stock market has fallen.
The S&, P 500, a broad stock market gauge, dropped 18.9 percent between its February 19 peak and April 8 low before recovering in the following two weeks. Compared with the day after Trump’s November 2024 election win, the S&, P 500 is now down 4.5 percent. Since Trump’s inauguration in January, it has decreased by 8.7%, while its peak on February 19 has decreased by 10.1 percent.
After a stock market decline, there is a strong correlation between recession and recovery. A stock market tumble can cause consumers to hunker down and cut spending. If that occurs, businesses experience declines in sales, which causes them to reduce their workforces and stymie new investments. Consumers are thus even more hesitant to spend, perpetuating the pattern.
Since 1950, a National Bureau of Economic Research committee has declared 10 official US recessions. Seven of those were accompanied by Declines in Standard & Poor’s 500. Almost a half-century ago, during the double-dip recessions of 1980 and 1982, there was a time when there was no notable S&, P decline.
Of the seven recessions that accompanied stock market declines, the S&, P 500 declines ranged from 18 percent to 55 percent, with the 55 percent drop occurring during the Great Recession of 2008 to 2009.
A new survey conducted each week by the American Association of Individual Investors reveals growing skepticism about the stock market’s ability to experience a quick rebound. In late November, 39% of survey respondents declared they were “bearish” about the stock market, which is the jargon for “pessimistic.” By late April, that share had risen to 56 percent.
Small businesses are already facing negative effects.
Beyond the numbers, we discovered several businesses where the company’s owners claimed Trump’s tariffs have already stifled growth.
Dennison, of the Original Pancake House, said in addition to Trump’s tariffs, he’s concerned that mass deportation efforts could produce a shortage of agricultural workers, further raising ingredient prices.
Owner of the Fresno, California Crazy Squirrel Game Store Jax Ward said she is experiencing both the “chaotic way it’s been handled,” which makes customers hesitant to spend money. Ward claimed that her peers in the game industry group, the Game Manufacturers Association, have heard similar reports.
A few publishers of tabletop games she sells have told Ward “they won’t be publishing this year, or they’re laying off employees, and that they’ve left manufactured products in China because it’s now far too expensive to import them”.
She claimed that everything from dice to games are produced overseas. It would be difficult for me to come up with a few products that are both US-made and made from natural resources.
For now, Ward said she is shifting some of her business to used games, including a large Lego section, and in-person events at her store. She also tries to pre-stock items before tariffs start to apply, but she said not every company can do so because it requires a stable cash flow and enough storage space.
Ward said she is aware of a few store owners who are considering shutting down their businesses. “Boardgame sales used to be considered recession-proof”, Ward said. We’ll check to see if they’re still there.
Source: Aljazeera
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