Since taking office in January, US President Donald Trump has hyped the performance of the US economy.
“In the first four years, we had the greatest economy in our country’s history,” Trump said when he met (incorrectly) Italian Prime Minister Giorgia Meloni. “I think it’s even better this time,” he added, referring to his first term from 2016 to 2020.
At the cabinet meeting on March 24th, he said: “We have numbers, we have work generation. I don’t think we’ve seen it before. Look at how it works. But I think the economy will go through the roof.”
Trump has not taken office long enough to accumulate a lot of economic data. The data available for employment and inflation is advantageous. However, other measurability, such as consumer trust, business expectations, inflation forecasts, and stock markets, shows that there is widespread concern about where the US economy is heading under his policies, particularly where his sudden tariffs will rise. And the April performance of the stock market was the worst since 1932, when the US suffered a great pression.
Since January, the number of employment has increased by 345,000, along with the previous year’s increase. The unemployment rate is 4.2%, a low level by historical standards, and initial unemployment claims are stable. And one of Trump’s major 2024 campaign themes, inflation – year-on-year, it fell to almost normal levels from 3.0% in January to 2.4% in March.
In various long-term research, consumers and businesses expressed concern that Trump’s tariffs could raise prices, cause a recession, and both. Economists view these indicators as barometers of how well the economy works in the near-medium term.
“All ‘soft’ data is bad, even though they haven’t bleed to the hard data yet,” said Douglas Holtz Arkhun, president of the Center Right American Action Forum.
Business owners say they are already feeling a pinch.
David Dennison, director of the original pancake house restaurant chain in the suburbs of Washington, DC, said the costs of foods such as oranges, peppers, avocados and tomatoes have increased by more than 20%.
“We also expect equipment breakdowns, parts and new equipment to experience significant price increases,” Dennison said. “But the most concerning aspect is the expected difficulty of procuring parts for equipment.”
Worried consumers and skittish companies can create slower growth in spending, investment, sales and employment. So, bad vibes can be self-fulfilling prophecies, said Dean Baker, co-founder of the Center for Liberal Economic Policy Studies.
Consumer sentiment is sliding
For decades, two studies have measured consumer confidence, with neither looking good during Trump’s first 100 days.
The University of Michigan Consumer Sentiment Survey, which measures consumer optimism about the economy, has been declining monthly since December 2024. The 52.2 mark in April represents a 29% decrease since December 2024.
Other long-term research has been published by the Conference Committee, a business research group. This metric also drops on the Trump clock every month, with readings 15% lower than in December 2024.
This will be tracked by other polls. For the first time since at least 2001, pollster Gallup discovered that over half of Americans say their financial situation is getting worse. The April figure of 53% is higher than the 2008-2009 Great Recession when it reached its peak at 49%.
Small Businesses – Historically, anti-axis and anti-establishment districts, which had high hopes for Trump’s agenda, have also shown a decline in confidence under Trump.
The Independent Business Research Federation, an optimist for small business, has declined monthly since December 2024, and has since declined more than 7%.
Inflation expectations are rising sharply
One of the main factors that keep consumer confidence in is the hope that Trump’s tariffs will raise consumer prices.
A University of Michigan survey asks consumers each month about their inflation expectations for the next 12 months. Consumers’ expectations for inflation next year have risen dramatically from inflation of 2.8% in December 2024 compared to the previous year’s forecast of 6.5% in April.
Companies feel the same way, according to a monthly Federal Reserve analysis in Atlanta. In December 2024, the survey found that 32% of companies expected a “significant” or “very important” price increase over the next 12 months. By April, that figure had risen to 46%.
A Federal Reserve Bank of Philadelphia also asked manufacturers if they have already paid more for recent transactions. The survey shows that more companies say they are paying more, and they say they are paying less. The gap has expanded from 26.6% in December to 51% in April.
Economic growth forecasts are eroded
The Atlanta Fed will release GDPNOW quarterly. This is predicted by considering the forecast for the domestic Gross Domestic Product (GDP) (total of all domestic economic activity) – upward and downward movement of key economic inputs.
GDPNOW is negative, with annual GDP shrinking of approximately 2.5% in the first quarter of 2025, the first forecast reduction generated by the model since the second quarter of 2022.
This is consistent with an independent estimate of the possibility of a recession. JP Morgan survey stated that there was a 60% recession the following year. Goldman Sachs puts that at 45%. The International Monetary Fund has a 37% chance of being fixed.
The stock market fell sharply
Stock is sliding. The S&P 500, a wide-ranging stock market gauge, fell 18.9% between its peak on February 19th and low on April 8th, and partially bouncing over the next two weeks. Compared to the day after Trump’s November 2024 election victory, the S&P 500 is currently down 4.5%. Since Trump took office in January, it has fallen 8.7%, down 10.1% from his peak on February 19th.
After the stock market slides, there is a high correlation, although the recession is not certain. If the stock market falls, consumers could lurk and cut their spending. If that happens, businesses are expected to have lower sales, cut their labor and delay new investments. This will allow consumers to warn more about spending and perpetuate the cycle.
Since 1950, the National Bureau of Economic Research has declared 10 official US recessions. Seven of them accompanied the Standard & Poor’s 500. It was almost half a century ago during the double-dip recession of 1980 and 1982 that the recession did not produce a significant S&P decline.
Of the seven recessions that saw the stock market fall, the S&P 500’s decline ranged from 18% to 55%, down 55% in the Great Recession of 2008-2009.
A weekly survey of the American Association of Individual Investors shows a growing pessimism regarding the stock market’s ability to short-term rebounds. In late November, 39% of survey respondents said the stock market was Wall Street’s terminology for “bearish” – “pessimistic.” By late April, its share had risen to 56%.
Small businesses are already experiencing headwinds
Beyond the numbers, we found several businesses that the leader said Trump’s tariffs were already causing problems.
Dennison, the original Pancake House, said he was concerned that in addition to Trump’s tariffs, he and the efforts to expel large-scale deportation could create a shortage of agricultural workers and raise raw material prices even further.
Jacks Ward, owner of the Crazy Squirrel Game Store in Fresno, California, said he has experienced not only customs duties, but also “the confused way it is being handled.” Ward said he heard similar reports from fellow members of the Game Maker Association, an industry group.
Some of the publishers of tabletop games she sells told Ward, “They are not going to publish this year, they are firing their employees, and they left the products manufactured in China because they are too expensive for them to import them.”
Everything from games to dice is made overseas, she said. “I struggle with coming up with a small number of products that are provided and manufactured in the US.”
For now, Ward said she’s turning some of her business into games that use games, including a large LEGO section and in-person events in her store. She also tries to save items ahead of time before tariffs begin, but she said not all businesses can do that because they need strong cash flow and ample storage space.
Ward said he knows several shopkeepers seriously considering closing their businesses. “Board game sales were once thought to have been withstanded by a recession,” Ward said. “We’ll see if they’re still.”