When voters returned Donald Trump to the White House in November, many had the economy at the best of their hearts. Candidate Trump vowed that he quickly lowered prices and foresaw a boom time in the market.
But that’s not nearly two months after the administration.
Instead, the market went south this week amid a large amount of data showing that federal cuts led by Elon Musk’s Doge Group are increasing concerns about job market conditions and tariff threats increase costs for shoppers withstanding inflation.
On Thursday, the S&P 500 benchmark entered the corrections territory. That means it’s 10% below the latest high. It was the fourth negative week – the time since such a streak happened was last summer.
A decline occurred as Trump increased his tariff strategy, his steel and aluminum duties came into effect, retaliatory tariffs were raised, threatening higher taxes on Canadian goods, and continuing to bring about new tariff warnings for European champagne and wine imports.
The stock price primarily reflects expectations regarding future earnings. And CEOs and analysts alike suggest that our consumers are undergoing a major shift in their outlook.
“I think it’s a bit of a uncertain world right now,” Dick’s chairman of sports goods, Ed Stack, when asked about the company’s expectations that profits would be low this year. “What happens from a tariff standpoint? What happens to consumers if the tariffs are in place and prices rise as they do?”
On Friday, the University of Michigan reported that business conditions for the year’s outlook had fallen to its lowest level ever. Meanwhile, the measurements from surveys on future inflation and unemployment have skyrocketed.
These results are part of a broader trend. A New York Federal Reserve consumer forecast survey released Monday showed that unemployment rates, consumers’ ability to pay their minimum debt, and prospects for credit access have been “particularly” worsening.
The National Federation of Independent Enterprises (NFIB), which has a more conservative trend, reported this week that its uncertainty index rose to its second-highest recorded reading last month.
“There’s a lot of uncertainty on Main Street and it’s rising for a number of reasons,” NFIB chief economist Bill Dunkilberg said in a statement. “SME owners who are hoping for better business conditions over the next six months have fallen, and the percentages that see them as a good time to expand their current period have fallen, but are well above the autumn location. Inflation remains a major issue and ranks second in top issues, working quality.”
A White House spokesman did not respond to requests for comment regarding the worsening outlook. However, while the president has shown no indications of abandoning his tariff strategy, members of his administration are now actively preparing voters for a potential recession.
Commerce Secretary Howard Lutnick said the recession was “worthy” this week, adding that Trump’s economic policy would become a “Biden economy” through the fourth quarter. White House economic adviser Kevin Hassett said trade policy uncertainty would be “settle” in early April and the economy would “take off” in the second quarter.
Treasury Secretary Scott Becent warned that the economy was necessary to “detoxify” its dependence on public spending, but he said in a subsequent interview he did not imagine a recession.
Trump himself says the economy is in a “transition.”
Others in the conservative information ecosystem portray the decline as a “result,” pointing to daylight in consumer prices.
Just like egg prices, it is true that gas prices have fallen while mortgage prices are falling. However, some experts say these developments arise against the backdrop of weakening overall demand and fear of economic growth as consumers begin to deal with this not the economy they signed up for.
“Many consumers cited a high level of uncertainty about policy and other economic factors. In a statement, Joanne Hussou, director of the University of Michigan Research, said in a statement that the frequent turnover of economic policies makes consumers extremely difficult to plan for the future, regardless of their policy preferences.”
Bloomberg News reported that 48% of survey respondents voluntarily mentioned tariffs during interviews with the university, and that their duties were expected to create significant upward pressure on future inflation.
In a note to clients on Friday, JP Morgan’s chief US economist Michael Ferroli lowered estimates of US growth that year, but the unemployment forecast is now rising to 4.4%.
“The growing uncertainty in trade policy should place emphasis on the growth of activities, particularly because of capital expenditures,” he said. Meanwhile, the tariffs that Trump has done what is impressive “create drugs that correspond to the bumps to headline inflation and consumer purchasing power,” he said.
“Last week, we waited for more clarity in our trade policy so we refrained from revising our economic forecasts,” wrote Ferroli. “In hindsight, I was able to wait for a very long time.”
