Trump’s on-again, off-again tariff threats against Canada, Mexico, China and others have left the US financial markets in turmoil and consumers unsure what the year might bring.
President Donald Trump declined in an interview aired Sunday to rule out the possibility that the United States might enter a recession this year.
โI hate to predict things like that,โ he told a Fox News interviewer when asked directly about a possible recession in 2025.
โThere is a period of transition, because what weโre doing is very big โ weโre bringing wealth back to America,โ he said, adding, โIt takes a little time.โ
But Trumpโs commerce secretary, Howard Lutnick, was more definitive when asked Sunday about the possibility of a recession.
โAbsolutely not,โ he told NBCโs โMeet the Pressโ when asked whether Americans should brace for a downturn.
Trumpโs on-again, off-again tariff threats against Canada, Mexico, China and others have left the US financial markets in turmoil and consumers unsure what the year might bring.
Stock markets just ended their worst week since the November election.
Measures of consumer confidence are down, as shoppers โ already battered by years of inflation โ brace for the higher prices that tariffs can bring.
And widespread government layoffs being engineered by Trumpโs billionaire advisor Elon Musk add further concern.
Some signs are mixed.
A widely watched Atlanta Federal Reserve index now predicts a 2.4 percent contraction of real GDP growth in the yearโs first quarter, which would be the worst result since the height of the Covid-19 pandemic.
Much of the uncertainty stems from Trumpโs shifting tariff policy โ effective dates have changed, as have the sectors being targeted โ as businesses and investors try to puzzle out what will come next.
Kevin Hassett, Trumpโs chief economic advisor, was asked on ABC whether tariffs were primarily temporary or might become permanent.
Hassett said that depended on the behavior of the countries targeted. If they failed to respond positively, he said, the result could be a โnew equilibriumโ of continuing tariffs.
The administration has insisted that while the economy will pass through a possibly bumpy โtransition,โ things are headed in a positive direction.
In his State of the Union message on Tuesday, Trump told Americans to expect โa little disturbanceโ as tariffs take hold, while adding: โWeโre okay with that. It wonโt be much.โ
And his Treasury Secretary Scott Bessent has warned of a โdetox periodโ as the economy cuts government spending.
Given the uncertainties, economists have been wary of making firm predictions.
Economists at Goldman Sachs, citing Trumpโs policies, have raised their odds of a recession over the next 12 months from 15 percent to 20 percent.
And Morgan Stanley predicted โsofter growth this yearโ than earlier expected.
Recessions are generally defined as two consecutive quarters of weak or negative GDP growth.
The US was briefly in recession in early 2020 as the Covid pandemic spread. Millions of people lost jobs.
AFP
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