CNN
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Donald Trump never told voters there could be a recession on his path to a new “golden age.”
The President’s rejection – twice – thwarted the stock market on Monday, when it thwarted American retirement accounts to rule out economic contractions this year.
However, within a month, S&P’s 9% loss reflects the wider force unlocked by the president in his new term, the uncertainty about what he will do next, and what the world will look like when he finishes.
Trump is trying to crush everything he thought everyone knew about our foreign aid, trade and economic policy. He launched a trade war with our neighbors, indiscriminately firing thousands of government workers and switching to punishing Ukrainian victims.
And, as he told the country a week ago, “We’re just starting out.”
So it’s not surprising that there is a price to be paid.
Trump voters love his instincts about confusion and volatility. But with consumer trust softening, employment slowing, and fears of recession increasing, the last thing the economy needs is for the president to launch uncertainty.
But in a Fox News interview on Sunday, Trump lacked his usual big explosion when asked if the strong economy inherited from former President Joe Biden would fall into a recession this year. “I hate predicting such things,” he said, “Who knows?”, exacerbating the damage in Air Force 1.
It wasn’t that much that Trump said, but the way the president said it was knowing unwavering certainty.
Trump’s clear perception of Fox News is that his policies, including tariffs, could cause a period of “transition” in the economy. Because the short-term pain is offshore and shows he is ready for a country that is tired of the high prices of food and housing to endure it.
For years, predictions that a resilient US economy was about to crash were wrong.
Apart from Covid-19, the last major contraction was during the Great Recession of 2008-09. And the Federal Reserve is bright despite several indicators in recent weeks flashing the possibility of slowing down. For a market that many analysts consider to be overvalued, a few weeks of bad weeks for corrections doesn’t need to predict a wider economic disaster.
But Trump is still playing on fire by trying to change so much. His administration has so far demonstrated excellent skills at tearing things apart, but fewer facilities have explained how his confusion translates into quick prosperity.
One example is Trump’s tough turns against Canada and Mexico, his threat to the 25% tariff he imposed last week, and his freeze for a month afterwards, as well as mutual tariffs catching other US friends on his dragnet in early April.
“What we see in our policy approach is a lack of vision,” Julia Coronado, president and founder of Macropolicy Perspectives LLC, told CNN International’s Richard Quest. “We all knew that we had a vision to narrow down the trade deficit and reuse some of our activities. …We are really chasing close friends, both at the foreign policy and trade level. It feels like a deeper change without a clear vision of what we are trying to achieve.”
White House officials on Monday dismissed the idea that panic and economic contraction in the market were looming. They also argued that the core weakness of growth was not due to Trump’s whiplash leadership, but rather a hangover from the Biden administration.
“What happens is that the first quarter will squeal into a positive category, and in the second quarter, everyone will take off as they see the reality of tax cuts,” Kevin Hassett, director of the White House National Economic Council, said of CNBC.
Trump still didn’t have time to fully enact his economic policies — or he didn’t have time to make his claims that they would make Americans much wealthier and soar the economy. But relying on the exciting potential of tax cuts to generate growth doesn’t say much about the underlying strength of the economy. And Hassett has set up an ambitious timetable to drive complex tax reduction bills through Congress, given the majority of the House of Representatives’ GOPs.
On NBC’s “Meet the Press” on Sunday, there was a happier story about the tariffs unleashing prosperity by Commerce Secretary Howard Lutnick. “There’s no recession in America,” Rutnick said.
Such rosy ratings are quite familiar and risk falling into the dangerous political trap that snatched the Biden administration. It’s about telling voters that the economy is in a better shape than it perceives. Repeated claims by Top Biden’s aides reiterated the claim that the worst inflation since the 1980s, early in his term, simply eroded “temporary” public trust in his presidency, and played a key role in paving the way for Trump’s return to the oval office.
It was also worth noting that the President did not appear publicly for a new economic commentary as one of his own performance’s favorite scorecards, the stock market tanked.
The growing concerns about the economy and the impact of Trump’s shock and endured policies raise some questions about his next move.
The president argued that his tariff policy would soon bring billions of dollars to the United States, rejecting the economic logic that consumers would pay at a higher price. His purpose is admirable. Restores American industrial bases that tore the hearts of rusty manufacturing areas. However, achieving this goal means reverse decades of globalization. This is a much longer task than the rest of the White House years. This places Trump’s comments on the economy’s “transition” period from a new perspective. Do Americans experience discomfort until the policy has consequences? Or will Trump respond to his distinctive volatility and respond to his days of sale on Wall Street by easing his policies? There are no indications of that yet. At Fox, the president, who insists on endless credit for market rallies on social media, warned that he “can’t really see the stock market.” He added: “If you look at China, you have a 100-year perspective. There’s a quarter. We go quarterly.” But last week, Trump didn’t even have a 100-hour perspective. After inadequate reactions and blowbacks from the market among Republican lawmakers, it freezes tariffs in Mexico and Canada the day after it was imposed. This week’s new card climbing may calm the market. But at some point, volatility itself can become self-past and increase the fear of a recession. One important question lies in Trump’s second semester. Is the President prepared to pay political prices and spend important capital to impose policies that represent a dangerous break from our orthodoxy over the years? He still enjoys loyal support from his base. However, the growing pressure on Congressional Republicans caused by the federal government’s shredding has shown that the GOP is unimmunized from the consequences of Trump’s actions. And next year’s midterm elections are approaching.
Trump’s presidency is only six weeks old. If the economy is stable and the markets respond, Monday’s panic will be considered a momentary blip.
However, there is a sense of precognition that a serious moment is approaching.
Former Treasury Secretary Larry Summers, who correctly called the inflation spikes that undermined Biden’s president, struck an ominous note Monday when he signed off after an interview with CNN’s Kasie Hunt.
“We wish you and your audience good luck during this challenging time,” he said.
