Janice R. Andrews
In a recent Fox News interview, former President Donald Trump declined to rule out the possibility of a US recession in 2025, sparking concerns among economists and investors. When asked directly about the potential downturn, Trump responded, “I hate to predict things like that,” emphasizing the ongoing “transition” as his policies aim to bring wealth back to America.
However, Trump’s Commerce Secretary, Howard Lutnick, offered a more optimistic outlook, stating unequivocally on NBC’s Meet the Press that a recession is “absolutely not” on the horizon. Despite this reassurance, financial markets remain volatile, with Trump’s fluctuating tariff threats against countries like China, Canada, and Mexico creating uncertainty.
The stock market recently concluded its worst week since the November election, and consumer confidence has dipped as Americans brace for potential price hikes caused by tariffs. Adding to the unease, widespread government layoffs orchestrated by Trump’s advisor, Elon Musk, have further fueled economic concerns.
Mixed economic signals complicate the picture. The Atlanta Federal Reserve’s GDPNow index predicts a 2.4% contraction in real GDP growth for the first quarter of 2025, which would mark the worst performance since the peak of the COVID-19 pandemic. Much of this uncertainty stems from Trump’s unpredictable tariff policies, which have left businesses and investors struggling to anticipate future moves.
Kevin Hassett, Trump’s chief economic advisor, suggested that tariffs could become permanent if targeted countries fail to respond positively, potentially creating a “new equilibrium” of sustained trade barriers. Despite these challenges, the administration maintains that the economy is on a positive trajectory, even if it faces a “bumpy transition.”
In his State of the Union address, Trump acknowledged that tariffs might cause “a little disturbance” but assured Americans, “We’re okay with that. It won’t be much.” Meanwhile, Treasury Secretary Scott Bessent warned of a “detox period” as the economy adjusts to reduced government spending.
Economists remain cautious. Goldman Sachs has increased its recession probability for the next 12 months from 15% to 20%, citing Trump’s policies. Similarly, Morgan Stanley forecasts “softer growth this year” than previously expected.
As the US navigates this uncertain economic landscape, all eyes remain on policy decisions and their potential impact on growth, jobs, and consumer confidence. With the possibility of a 2025 recession still looming, the coming months will be critical in shaping the nation’s economic future.
