WASHINGTON (AP) — With his surge in tariffs, government layoffs and spending freezes, President Donald Trump is worried that he’s doing more to harm the US economy than to fix it.
The labor market remains healthy with an unemployment rate of 4.1% and 151,000 jobs added in February, indicating that Trump points to investment commitments by Apple and Taiwanese semiconductor manufacturers, providing results.
What you need to know
His tariffs, government layoffs and spending freezes have raised concerns that President Donald Trump may be doing more to harm the US economy than fix it.
Since January, the economic policy uncertainty index has risen 41% to level 334.5, which has previously signaled the recession.
Trump appears to be satisfied with the uncertainty, saying that the financial pain caused by import taxes is merely a “disruption” and that will ultimately lead to more factories moving to the US, leading to stronger growth.
This particular form of economic rehabilitation comes from Trump’s Department of Government Efficiency. This is led by Thech Mogul Elon Musk, who is in a T-shirt, owner of Tesla, X and SpaceX.
However, Friday’s employment report found that the number of people working part-time due to the economic situation jumped at 460,000 last month. 16,000 jobs have been lost in the leisure and hospitality sector, which reflects consumers spending extra money. And the federal government has cut salaries by 10,000 in potential lawsuits of alarms that are blaring through stock markets, consumer confidence, and other measures about where the economy is heading.
Since January, the economic policy uncertainty index has risen 41% to level 334.5, which has previously shown a recession. Nicholas Bloom, an economist at Stanford University and co-developer of the Uncertainty Index, said it’s unclear how this will unfold, but he’s worried.
“We are increasingly at risk of entering what could become known as the ‘Trump recession’,” he said. That last recession happened under Trump due to the coronavirus pandemic.
On his part, Trump appears to be satisfied with the uncertainty he is creating, saying that the financial pain from import taxes is merely a “disruption” and that will ultimately lead to more factories moving to the US, leading to stronger growth.
If Trump’s gambit is successful, Republicans will solidify his reputation as a suspicious leader and prove that the suspicious is wrong. But if Trump’s tariffs backfire, much of the price will be paid by everyday Americans who may suffer unemployment, lower wages, increased inflation, and perhaps the pride of their injured citizens.
In an interview with Fox News’ Sunday’s broadcast on Sunday’s “Sunday Morning Futures,” Trump was forced to provide some clarity to his tariff agenda, which caused uncertainty. The president hedged his answer mostly, denounced the stock market’s 6% decline in “Big Globalists” over the past two weeks.
“You know, tariffs can go up over time, and they may go up, and I don’t know if that’s predictable or not,” the president said.
The White House claims that Friday’s employment report showed the administration’s strategy was working as the makers added 10,000 jobs. Of the manufacturing growth, 8,900 jobs came from the auto sector, recovering some of the industry’s unemployment in January. The White House also suggested that losses in leisure and hospitality jobs were the result of flu season and those who ran out of savings and credit card debt for President Joe Biden’s term.
“I thought it was a really, really impressive work report,” White House National Economic Council director Kevin Hassett said of the numbers on Friday.
Hassett said the additional factory work was the result of the “supervisory” work of the corporation due to the coming tariffs.
“This is the first of many reports that look like this,” Hassett said regarding employment in the industrial sector.
A stock market sale raises questions about whether tariffs will produce promised work.
“The market is predicting,” said John Silvia, CEO of Dynamic Economic Strategy. “Turn lowers the dark alleys of tariffs, indicating higher inflation, slow economic growth, and weaker US dollars. It’s a slow motion economic horror film.”
Trump incited a trade war with Canada, Mexico and China last week, but suspended for a month in part of his import tax due to threats to US auto factory jobs and Mexico’s latest efforts to curb fentanyl smuggling.
More tariffs are coming towards Europe, Trump said. Perhaps the United States could fall into open conflict with the continent that would help rebuild after World War II. South Korea, India and Brazil could also face new tariffs, Trump said in his address to a joint parliamentary meeting on Tuesday.
Sylvia said Trump’s tariffs should be more targeted with regard to products and the nation and set at a lower rate, adding that doing so will provide assurance that there will be solid research to support the measure.
There were multiple indications of uncertainty and concerns about tariffs in the Federal Reserve beige book.
The beige book, published Wednesday, contained 47 references to uncertainty from just 17 in the previous edition of January.
“Many businesses have acknowledged the strengthening of economic uncertainty and expressed concern about tariffs,” the Fed’s New York branch reported. “Companies weren’t particularly optimistic going forward.”
“This is the perfect storm for businesses,” said Brian Bethune, an economist at Boston University. “How can I plan something in this environment?”
Still, Treasury Secretary Scott Bessent said on Friday he saw positive momentum in the fight against inflation at CNBC. He said crude oil prices have fallen since Trump took office, similar to the interest rates on US Treasury bonds and mortgages in 10 years.
Still, interest rates on government debt were higher than last year in September, and the recent decline could reflect a slower economic demand.
Bescent suggests that the core issue is that the US economy is overly dependent on government deficits, and that the Trump administration will drive stronger private sector growth.
“We’re hooked on this government spending and we have a detox period,” he said.
This particular form of economic rehabilitation comes from Trump’s Department of Government Efficiency. This is led by Thech Mogul Elon Musk, who wears a t-shirt, owner of Tesla, X and SpaceX, among other companies.
Doge’s alleged savings are still small to bending the troublesome trajectory of national debt, driven primarily by tax revenues that are insufficient to cover rising costs for Social Security and Medicare.
However, the initiative began to shrink the federal workforce in ways that could surface in future Jobs reports. Approximately 75,000 employees have made plans for resignation, which has been postponed. It also comes down to thousands of probationers being fired and tens of thousands of layoffs, based on the administration’s plans.
Asked in an oval office on Friday if government layoffs could hurt the entire labor market, Trump said the economy would grow.
“I think the labor market will be great, but that will be a good job in a manufacturing industry,” he said. “There were too many people in the government. You can’t do that. ”
