U.S. Economy Experiences Brief Recession Under Trump's Administration
In a candid chat with NBC News, President Trump expressed his optimism about the future of the U.S. economy, stating that in the long haul, it would remain "solid." He admitted that the country might encounter a short-term recession, but asserted that the White House would tackle it "with aplomb."
Trump dismissed concerns from financial analysts about a potential U.S. recession due to its volatile trade policies, proclaiming that many on Wall Street believe this could be "the greatest economic boom in history."
However, most portfolio managers surveyed by Bank of America are skeptical about Trump's economic strategies. They attribute the potential global recession to his foreign policy decisions, particularly the ongoing trade war with China. The WTO Director-General Ngozi Okonjo-Iweala warns that if the U.S. and China continue their trade spat, global GDP could shrink by up to 7% in the long run.
It's important to note that while there's a significant amount of uncertainty about the impact of U.S. trade policies on global growth, most analysts anticipate a moderate economic contraction rather than a synchronized global recession. For instance, the U.S. is expected to experience the sharpest slowdown, with potential GDP growth dipping to 0-0.5% in 2025, including possible technical recessions. Europe, on the other hand, is projected to grow 0.5-2% in 2025, thanks to ECB rate cuts, fiscal stimulus, and lower input costs from redirected Chinese exports.
The ongoing trade tensions are expected to cause a global trade contraction, with North America’s exports and imports projected to decrease by 12.6% and 9.6%, respectively, in 2025 under current policies. Reciprocal tariffs have led to heightened financial market instability, with China imposing 125% tariffs on certain U.S. goods, and over 75 countries seeking negotiations.
Despite these challenges, most developed economies are expected to avoid recession in 2025. However, the downside risks are substantial. The U.S. tariff surge to a 100-year high and retaliatory measures pose threats to supply chains and consumer demand, particularly in trade-dependent sectors. However, strong pre-2025 balance sheets in households, corporations, and banks may shield against a 2008-style crisis.
The 90-day U.S. tariff pause offers a temporary respite but does not resolve long-term uncertainties, leaving businesses to navigate near-term decisions while preparing for potential prolonged protectionism.
- Despite the optimism from President Trump, many portfolio managers believe the ongoing trade war with China could lead to a global recession.
- The WTO Director-General Ngozi Okonjo-Iweala warns that if the U.S. and China continue their trade spat, global GDP could shrink by up to 7% in the long run.
- While most analysts anticipate a moderate economic contraction rather than a synchronized global recession, the ongoing trade tensions are expected to cause a global trade contraction, with North America’s exports and imports projected to decrease.
- Going forward, the U.S. is expected to experience the sharpest slowdown, with potential GDP growth dipping to 0-0.5% in 2025, including possible technical recessions.
