Economist and former New York Times columnist Paul Krugman is warning that between steep tariffs on longtime U.S. allies, extensive layoffs of federal government workers, and mass deportations, President Donald Trump’s policies may trigger a major recession in the United States. And the Dow Jones Industrial Average has been quite volatile in response to the trade war that Trump is waging against Canada, Mexico and other countries.
According to Wall Street Journal reporters Rachel Louise Ensign, Natasha Khan and Ruth Simon, Americans’ spending habits reflect fears that an economic downturn is on the way.
In an article published on March 15, the WSJ journalists explain, “President Trump’s stop-and-start trade wars and other rapid-fire policy changes are making Americans feel gloomy about the economy. Their 401(k)s are down, and their expectations for inflation are up. Now, they are paring back spending on extras such as vacations and home-improvement projects.”
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Ensign, Khan and Simon add, “The University of Michigan’s closely watched index of consumer sentiment nosedived 11 percent to 57.9 in mid-March from 64.7 last month. Sentiment among Democrats was the lowest ever recorded, including the depths of the 2008-09 financial crisis. Even Republicans are feeling worse, although many think that any short-term economic pain caused by Trump’s moves will be worth it. On a recent Sunday, Trump declined to rule out a recession.”
The WSJ journalists note that “bleak sentiment about the economy can become a self-fulfilling prophecy.”
Economist Rebecca Patterson told WSJ, “The consumer drives the U.S. economy. Where the consumer goes the economy goes…. Consumers cut back first on the nice-to-haves and the big-ticket items. Within the must-haves like food, they might switch to a lower-cost brand “
According to Ensign, Khan and Simon, “companies making everything from casual wear to luxury goods and liquor to everyday staples” are warning of a “slowdown in consumer demand.”
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Suresh Mallikaarjun, a resident of the Washington, D.C. suburbs, told WSJ he is holding off on buying a new car after seeing his retirement accounts decline.
Mallikaarjun, who is originally from India, lamented, “I’ve lived in this country for 42 years — I’ve never seen a time like this. In January, everything is OK, and then suddenly, the whole Earth opens up before you.”
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Read the full Wall Street Journal article at this link (subscription required)
