President Trump’s swift moves to reduce federal spending, lay off government workers, and impose tariffs on key trading partners are causing concern among businesses and state governments. The sudden changes in fiscal policy are affecting consumer sentiment, leading to increased inflation expectations and slowing business investment plans.
Economic surveys show that the funding freezes and firings of federal workers, combined with the prospect of costly trade wars, are taking a toll on local economies. Officials are now considering tax increases or municipal bond offerings to stabilize their budgets.
While Mr. Trump has acknowledged that his policies may lead to some initial pain, the early warning signs suggest that his approach could have more significant and far-reaching consequences for the economy. The US economy is bracing for the impact of these changes, and it remains to be seen how businesses and state governments will adapt to this new economic landscape.
Source: https://www.nytimes.com/2025/02/27/business/trump-tariffs-spending-cuts-economy.html