The US economy has likely entered a recession, marking the end of a 4 1/2-year post-pandemic recovery. The problem isn’t just that the Trump administration’s policies have hit the economy hard, but rather the administration’s governing strategy is chaotic and unpredictable.
Economic data through January showed strong growth, with inflation-adjusted GDP growth at 2.8% and a labor market expansion of 143,000 jobs in January. However, the impact of President Trump’s trade policies, including tariffs on China and Canada, has led to higher taxes for US families and disrupted government spending.
The US is facing uncertainty and chaos, with economic confidence plummeting and consumption declining sharply. The yield curve on bonds has inverted, indicating that long-term interest rates are expected to decline relative to short-run rates. The Federal Reserve’s GDPNow model also predicts a recession, with first-quarter US GDP expected to decline by 2.8%.
While it’s possible that President Trump could reverse some of his policies and prevent a deep downturn, the evidence suggests that he is committed to his governing strategy. The Trump administration’s actions have led to a policy choice that is driving the economy into recession.
The impact of the US government shutdown in mid-March has been exacerbated by the chaos caused by the Trump administration’s policies. With nearly every measure of economic health plummeting, it’s clear that the US economy is facing significant challenges.
As the director of the Center for Business and Economic Research and a professor of economics at Ball State University, Michael J. Hicks is well-positioned to analyze the impact of the Trump administration’s policies on the US economy. His concerns about the state of the US economy are borne out by the latest data, which suggests that the country is heading into recession.
Source: https://eu.indystar.com/story/opinion/columnists/2025/03/06/trump-tariffs-doge-recession/81684786007