Is Trump Driving the Economy Downward and Leading to a Recession?

Is Donald Trump undermining the economy?

The stock market has taken a hit, erasing six months of progress in just three weeks. Various economic indicators—like consumer confidence and GDP projections—have become more pessimistic.

Many experts point to Trump and his fixation on trade wars as the primary cause. The stock market has voiced its disapproval of Trump’s tariffs, and more than just the tariffs themselves, it’s the unpredictability of his next moves that is creating apprehension among investors, complicating business planning.

While it appears that Trump is negatively impacting the economy, the extent of that impact is still uncertain. The US economy—like life itself—includes numerous factors beyond Trump and the stock market, and several key indicators suggest that overall conditions remain satisfactory.

The economy Trump took over from Joe Biden was generally stable, though not free of persistent challenges. Concerns about the potential for rising inflation led the Fed to maintain higher interest rates, and there were indications of slowing GDP growth, alongside fears that both stock and particularly tech and AI valuations were inflated, compounded by a downturn in the housing market.

The booming economy lingered through Trump’s initial month in office, as uncertainty prevailed regarding his seemingly outlandish tariff proposals. However, as it gradually became clear that the nation was on Trump’s tumultuous Tariff Ride, public sentiment shifted. Surveys released in late February showed a notable drop in consumer confidence, largely driven by tariff-related anxieties.

The markets experienced an even steeper decline. Starting February 21, stock prices began to drop and have continued on that trajectory. Within 18 days, major stock indices—the Dow Jones Industrial Average, the S&P 500, and the NASDAQ—erased gains accumulated over the previous six months.

Clearly, continued trends like this would be detrimental.

That said, broader economic indicators reveal signs of some downturn, but not yet a catastrophe.

It’s reflected in the February job numbers, which still appear healthy. Similarly, GDP growth projections for the current quarter have been revised down by Goldman Sachs from 2.4 percent to 1.7 percent—a decrease, but not yet indicative of a recession. Additionally, the CPI (consumer price index) data for February indicated that inflation is not spiking yet, despite some concerns (though it is important to note that Trump’s tariffs, which are expected to raise many prices, had largely not been implemented at the time).

In summary, it seems the economy is, so far, managing to hold steady despite Trump’s disruptions.

But can this resilience last?

In theory, Trump could take actions to restore confidence in the markets, yet in practice, his strategies appear to have the opposite effect. During an interview last weekend, he appeared unfazed by the potential for a recession, suggesting there would be a “period of transition” while he advances his economic strategies. With a new and even broader wave of tariffs scheduled for April 2, the question looms: where will his unpredictable approach lead us next?