Trump Declines to Rule Out Recession

President Trump declined to rule out that the U.S. economy would contract this year and enter a recession, saying that his sweeping economic agenda could cause short-term turbulence that he believed would drive future prosperity.

Asked in a “Sunday Morning Futures” interview on Fox News if he was expecting a recession this year, Trump replied: “I hate to predict things like that. There is a period of transition because what we’re doing is very big.”

Trump has moved to overhaul the U.S. economy in an agenda focusing on new tariffs, limiting immigration and cutting regulations, government jobs and taxes. He is also looking for spending cuts in a number of federal programs. While many businesses have cheered his broader agenda, the uncertainty over tariffs on close trading partners Mexico and Canada has rattled markets. He has proposed and pulled back tariffs multiple times in just the past few months.

The president’s moves are testing the resilience of the American economy, which has had robust growth and low unemployment. There are some early signs of strain, with a drop in consumer spending and fears about inflation weighing on businesses.

The stock market rallied in late 2024, fueled by investor enthusiasm about his agenda. But it has sputtered in recent weeks. The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite Index all closed Friday at lower levels than where they were when Trump was inaugurated on Jan. 20.

In a sign of the stop-and-start implementation of his trade agenda, the Trump administration last week paused 25% tariffs on most cars and parts that flow across the borders from Mexico and Canada less than 48 hours after they took effect.

In the interview that aired Sunday, the president demurred when asked if there were reassurances he could provide to businesses seeking more clarity on tariffs.

“Well, I think so,” he said. He then added: “You know, the tariffs could go up as time goes by.”

The president, who regularly bragged about the stock-market performance in his first term, played down its importance to his second-term agenda.

“Look, what I have to do is build a strong country. You can’t really watch the stock market. If you look at China, they have a 100-year perspective,” he said.

Later Sunday, Trump defended his tariff policy, telling reporters that the levies “are going to be the greatest thing we’ve ever done as a country.” A reporter said he hesitated in the Fox News interview when he was asked about a recession. “Of course you hesitate,” Trump said. “Who knows?” He then repeated his assertion that tariffs would make the country rich.

Treasury Secretary Scott Bessent last week also said that the U.S. economy could be in for a rough patch during this economic transition.

“The market and the economy have just become hooked,” Bessent said on CNBC’s “Squawk Box.” “We’ve become addicted to this government spending, and there’s going to be a detox period.”

Trump has in recent days acknowledged the choppiness tariffs have brought. “There could be some disturbance, a little bit of disturbance,” he said Friday. In his Tuesday speech to Congress, Trump defended his agenda while also noting there could be some disruptions.

The U.S. continued to generate jobs at a steady pace in February, according to data released last week. But economists see signs that employment could weaken in coming months, because of government layoffs, reduced government funding, uncertainty over tariffs and immigration restrictions. A sharply divided Congress also faces a Friday deadline to approve more funding to avoid a government shutdown, adding another wrinkle to the economic outlook.

Commerce Secretary Howard Lutnick ruled out an economic contraction in his own television appearance Sunday.

“There’s going to be no recession in America,” he said on “Meet the Press” on NBC News. The U.S. economy hasn’t been in a recession since the beginning of the pandemic in 2020.

Story by Tim Hanrahan, MSN

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