The president of the United States, Donald Trump, has surprised his own and strangers this weekend by not denying the possibility of a recession in the US this year. The Republican during his interview in Sunday Morning Futures He was asked about the option and far from saying that it was something that would not happen, he said that “I hate to predict things like that, we are in a period of transition bringing the richness back eeuu.” In that sense, he acknowledged that “It can be a process that takes time”. Regarding whether all these measures can turn on inflation, he acknowledged that “yes, but in the meantime interest rates have also dropped,” said diluting that responsibility between the White House and the Fed.
Quickly the Secretary of Commerce Howard Lutnick came up to say that “In no way will there be recession. ” The high position explained that “Trump is bringing the growth towards the US, so that scenario will occur.” Hours before the statements of the president, his secretary of the, Treasury, Scott Besent, did recognize that he has to prepare for an economic blow that he defined in an interview with the CNBC as “a detoxification of government spending.”
After this crossing of statements, the debate has been lit as a recession is or not a disposable scenario. A few months ago the US economy was completely at full performance and both institutions and analysts expected Strong internal consumption, a resistant labor market and great business health They continued to largely hold this status. However, the reality is that the majority of analysts do not believe that the blood reaches the river and betting in the US growing despite the tariffs and the greatest uncertainty, they do glimpse a great deceleration at least this first year with Donald Trump
One of the indicators that has ignited the alarms in this regard has been the GDPnow of the Federal Reserve, which Talk about a real GDP drop of 2.4% in the first quarter. To know the official figures and if these fears are confirmed, we will have to wait for March 27, when the Department of Economic Analysis publishes the preliminary data. The Central Bank explains that these forecasts come mainly from exports. Although the expense of real consumption and internal investment did remain stable, “the short -term forecast of net exports to real GDP growth fell from 3.57% to 3.84%.” If this estimate was confirmed, we would be faced with the worst record since the second trimester of the pandemic, when it entered its peak.
If this would be confirmed, the land paid for a technical recession would leave if the US economy He fails to rebound in the second quarter of the year. However, this option is limited. Tariffs can bring a temporary blow but the recession, although increasing their possibilities, is still in a minority range in the analysts’ forecasts.
El-Erian, an economic advisor of Allianz, explains that this indicator is not reliable to 100% at the beginning of the year and in the first months it is subject to strong volatility. “Despite volatility, it’s really worrying,” says the expert. The fact that In a few days it has gone from forecasting 3.9% From growth to a contraction, the consensus that the progress of GDP is under siege is growing. “From Goldman defend that although they see a slowdown, the GDP now of the Atlanta Fed New York Fed of a GDP rising to 2.9%, solidly.
Some data are already starting to worry. At the end of February the Commerce Department reported that the Personal expense fell 0.2% in January, Below market estimation, which expected an increase of 0.1%. Adjected to inflation, the expense fell 0.5%. For its part, consumer’s confidence is already at least 15 months.
From S&P global they affirmed in their last PMI data that they are appearing “A marked deceleration of business growth in the United States and an increase in goods prices. “The firm talked openly about a” growth that wobbles “, noting that the preliminary compound PMI has fallen to 50.04 points, touching the contraction zone (50 points marks the growth). All this after having been in 55.3 in December and 53.7 in January.” While there are still growth, the latter data indicate a pronounced slowdown. “
Employment endures
The markets, in any case, expected the great appointment of employment data, published last Friday. From TS Lombard they explain that they brought the opposite, despite a slight disappointment, they really give good faith of the strength of the labor market, By creating 111,000 non -agricultural payroll. “February employment data indicate that there will be no recession.” In any case, Steven Blitz, the firm analyst, points out that “the sum of Trump’s actions can still skew the economy in any direction including an implosion of capital spending.”
On the other hand, despite the fact that official data today collect calm from the point of view of employment, the truth is that in this front there is a Trump policy that is generating certain fears in the markets. The mass employment cuts of Elon Musk’s government efficiency department. The data only collect figures related to a maximum date of February 12. In that sense, The 10,000 jobs less in the White House They can be just a snack of a huge layoff concatenation that activates alarms and hits the economy.
“The fears of an economy collapsing towards recession with government cuts can resurface in the March Employment Report”
From Capital Economics they commented that “the fears of an economy collapsing towards the recession with the government cuts can resurface in the March Employment Report, when the recent layoffs of the federal government will be a much greater ballast.” The monthly report of the HR company Challenger Gray & Christmas spoke of 172,000 layoffs in the public sector, the highest figure since July 2020. In Capital Economics they speak of a projection With the passing of the months of 300,000 layoffs.
Claudia Sahm has also spoken in this regard. This former Fed economist was creator of a key recession indicator that bears his name, based on the labor market and that did not fail from the sixties to 2024 (when he failed due to the excess labor supply in a very short time that altered the logic of his formula). Sahm has clarified that while they don’t see A recession for Musk’s cuts, Since federal employment is only 2% of the total, it does “encourage the ingredients that unleash it (layoffs and a rapid rhythm of uncertainty).”
The key to ‘recession’ are tariffs
All these problems are especially enhanced by tariffs, which are really what is shaking perspectives and generating the greatest uncertainty. Trump has imposed 10% extra to China and 25% to products such as steel and aluminum. For its part, even if they are suspended, it has put another 25% on the table on the Canada and Mexico trade. It has also launched other tariffs on key products such as medications cars. In short, despite of the chaos that are assuming the successive adsthreats, delays in some and negotiations, the objective of the Republican is to use this tool to reduce the US trade deficit.
These are the ones that have led Goldman Sachs to increase your recession chances from 15% to 20% Last Friday in your latest report. It is still a distant scenario, but it is derived from a blow that calculate in 0.8 percentage points due to tariffs. Manuel Abecasis, the firm analyst explained that now they expect the US GDP to only grow 1.7% by 2025 compared to the 2.2% they budgeted a few days ago.
A recent study by Yale University published last week spoke that with tariffs already on the table only in the short term and without reprisals, They expect an impact 0.6 percentage points on real GDP of the country. In addition, they add that while the direct impact would be minimized in 2026 to only 0.1 percentage points, “in the long term production will be 0.3% lower in the US with limited reprisals and 0.4% less with full reprisals.” In summary, the university estimates that the US only with this coup in production would receive a “permanent blow” between 80,000 million dollars annually and 110,000 million.
“The longer the encumbrances are maintained, the more the risk of recession grows”
The Economic Advisory Committee of the American Banqueros Association launched a report on Friday where I commented that although they expect growth to continue “We recognize the risks emanating from policy change and uncertainty“. In that sense, the committee confirmed by the 16 economists in chief of the main banks of North America reduced their 2.1% GDP forecasts and maintained the risk of 30% recession.
“The prognosis of consensus of positive economic growth and a low risk of recession is based on the expectation that the new rates will not remain in force throughout the year 2025,” said Luke Tilley, president of the Committee and Chief Economist of M&T Bank/Wilmington Trust. “The longer the encumbrances are maintained, the more the risk of recession grows. In addition, the high housing costs continue to present obstacles to consumers and the economy in general despite a recent deceleration both in the appreciation of housing prices and in the growth of rental rates. “
Enguerrand Artaz, strategist of the financing of L’Enciquier (LFDE) comments that “the American exceptionality that has shone for two years, and that the consensus had imagined that it would be maintained, staggers.” The expert comments that the key factor is that the growth will be weighed by “the sinking of the trade balance, caused in turn by the accused increase of imports in anticipation of the increase in tariffs.” Consequently “American growth should slow downat least in the first quarter. “In this sense,” political uncertainty is sinking the confidence of companies and households, and the labor market weakens again, especially due to the cuts of public employment carried out by Elon Musk’s Doge. “
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