The US economy is in a solid position despite market turmoil and recession warnings sparked by President Donald Trump’s tariff escalation. Federal Reserve Chair Jerome Powell acknowledged the disconnect between strong economic data and a gloomy outlook, attributing it to a lag in data release.
Measures of the economy like inflation and hiring are released a month after data collection, which can make them outdated, especially during times of economic flux. In contrast, market sentiment indicators such as stock performance and consumer surveys offer an up-to-date snapshot of market conditions.
Experts warn that forecasts derived from these metrics may be imperfect, leaving room for overestimation or underestimation of the eventual effect of tariffs. Economists expect Trump’s tariffs to hike costs, slow growth, and impact consumer spending.
Despite this, the economy remains robust, with a historically low unemployment rate, robust job growth, and cooled inflation. The latest data on gross domestic product will provide insight into economic growth at the start of 2025.
While some economists caution that the perceived strength may be a mirage due to retrospective data, others point out that Trump’s policies have created uncertainty and increased taxes for corporations. The outlook has changed significantly since the Biden administration, which brought about an economic recovery but also risked severe inflation.
With recession fears mounting on Wall Street, forecasts suggest a higher likelihood of a downturn within the next year or two. However, experts stress that the gap between strong economic data and dire warnings may be smaller than it seems, awaiting further clarification from future data releases.
Source: https://abcnews.go.com/Business/trumps-tariffs-roiled-markets-data-shows-solid-economy/story?id=120920815