President Donald Trump has declined to rule out the possibility of a US recession this year, saying in a recent interview that the economy is going through a “transition” as his administration pushes major economic changes.
When asked directly about a potential downturn, Trump told Fox News he did not want to make predictions but insisted his policies were focused on bringing wealth back to America. He acknowledged that such shifts take time and could cause temporary disruptions.
Despite Trump’s cautious remarks, Commerce Secretary Howard Lutnick took a more confident stance, stating there was “absolutely” no reason for Americans to worry about a recession. He dismissed concerns of an economic slowdown in an interview on NBC’s Meet the Press.
However, financial markets have been rattled by Trump’s fluctuating tariff policies on countries like Canada, Mexico, and China. Stock markets just ended their worst week since the last election, and consumer confidence is slipping as inflation-weary shoppers prepare for potential price hikes due to tariffs.
Adding to the uncertainty, government layoffs linked to cost-cutting measures led by billionaire advisor Elon Musk have sparked fears of further economic strain. The Federal Reserve’s latest data now predicts a 2.4% contraction in GDP for the first quarter of 2025, the worst since the height of the Covid-19 pandemic.
Trump’s top economic advisor, Kevin Hassett, suggested that tariffs could either be temporary or become a lasting feature of US trade policy, depending on how other countries respond. Meanwhile, Treasury Secretary Scott Bessent warned that the economy would go through a “detox period” as government spending is reduced.
Economists remain divided on what lies ahead. Goldman Sachs has raised the likelihood of a recession over the next year from 15% to 20%, while Morgan Stanley now expects slower growth than initially forecasted. A recession is typically defined as two consecutive quarters of economic contraction, something the US has not seen since the brief downturn caused by the Covid-19 pandemic in early 2020.
With uncertainty growing, all eyes are on how Trump’s economic strategy will play out in the coming months.