WASHINGTON: On Sunday, President Donald Trump refused to rule out the possibility of a recession in the United States this year.
In response to a direct question about a potential 2025 recession during a Fox News interview, Trump said, “I hate to predict things like that.”
Economic Uncertainty and Mixed Signals
Speaking on economic conditions, Trump explained, “There is a period of transition, because what we’re doing is very big—we’re bringing wealth back to America. It takes a little time.”
However, his commerce secretary, Howard Lutnick, was more definitive in his response. Appearing on NBC’s Meet the Press, Lutnick stated, “Absolutely not,” when asked if Americans should brace for an economic downturn.
The financial markets have shown signs of distress, with Trump’s intermittent tariff threats against China, Canada, Mexico, and other nations contributing to economic uncertainty. The stock market recently concluded its worst week since the November election, while consumer confidence metrics continue to decline. Consumers, already impacted by years of inflation, are now concerned about possible price hikes stemming from tariffs.
Additionally, mass federal layoffs orchestrated by billionaire businessman and Trump adviser Elon Musk have sparked further concerns over economic stability.
Later on Sunday, aboard Air Force One, Trump was asked again about the possibility of a recession. His response: “Who knows?”
Federal Reserve and Market Outlook
According to a widely monitored indicator from the Atlanta Federal Reserve, real GDP growth in the first quarter of 2025 is expected to drop by 2.4%, marking the lowest rate since the peak of the COVID-19 pandemic.
Trump’s evolving stance on tariffs is a key factor contributing to economic uncertainty, as investors and businesses struggle to anticipate upcoming policies. The administration has altered both the targeted industries and implementation timelines, further complicating market expectations.
When asked on ABC whether tariffs would be temporary or long-term, Trump’s senior economic adviser Kevin Hassett responded that it would depend on how affected nations responded. If they did not cooperate favorably, he suggested a “new equilibrium” of ongoing tariffs.
Government Stance and Economic Predictions
Despite concerns, the Trump administration maintains that the economy is headed in the right direction, though it acknowledges a period of adjustment.
“We’re okay with that,” Trump said in his State of the Union address on Tuesday, cautioning Americans to expect “a little disturbance” when tariffs are enacted. “There won’t be much.”
Treasury Secretary Scott Bessent also warned of a “detox period” as government spending slows down.
Economists remain hesitant to make definitive projections due to the high level of uncertainty. Goldman Sachs has increased its estimated probability of a recession within the next 12 months from 15% to 20%, citing Trump’s economic policies. Morgan Stanley has also revised its forecast, predicting “softer growth this year” compared to previous estimates.
Typically, a recession is defined by two consecutive quarters of weak or negative GDP growth. The last U.S. recession occurred in early 2020, during the onset of the COVID-19 pandemic, leading to significant job losses nationwide.
As economic indicators remain mixed, analysts and policymakers continue to monitor the situation closely.
