President Donald Trump and senior White House officials are warning Americans about a potential economic slowdown, which they claim will lead to stronger growth in the long term. With fears mounting over tariffs, slowing job growth, and negative indicators for the first quarter, the administration is projecting cautious optimism.
Trump Addresses Economic Transition
During an interview on Fox News’ “Sunday Morning Futures,” Trump said, “There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing. … It takes a little time, but I think it should be great for us.”
When asked about the possibility of a recession, Trump avoided a direct prediction, saying, “Look, we’re going to have disruption, but we’re OK with that.” Meanwhile, markets have remained volatile, with major stock indexes swinging based on economic news and White House statements.
Economic Adjustment and Spending Detox
According to Treasury Secretary Scott Bessent, the U.S. is undergoing a necessary shift away from debt-driven government spending. “There’s going to be a natural adjustment as we move away from public spending to private spending,” Bessent said on CNBC. “The market and the economy have just become hooked and we’ve become addicted to this government spending, and there’s going to be a detox period.”
The Atlanta Federal Reserve’s GDPNow model is currently projecting a 2.4% contraction in first-quarter GDP growth, the largest decline since the COVID pandemic.
Trump Officials Downplay Recession Risks
Despite these warning signs, National Economic Council Director Kevin Hassett described the downturn as a “very, very temporary phenomenon,” attributing it to economic adjustments following the Biden administration’s policies. Commerce Secretary Howard Lutnick echoed this sentiment on NBC’s “Meet the Press,” stating, “There’s going to be no recession in America. … If Donald Trump is bringing growth to America, I would never bet on recession, no chance.”
Consumer Spending and Job Market Concerns
January’s trade deficit surged to a record $131.4 billion, partly due to stockpiling ahead of tariffs. Meanwhile, concerns are growing over consumer spending, which accounts for more than two-thirds of U.S. GDP. Additionally, the February jobs report showed a 151,000 increase in payrolls, but deeper data revealed troubling signs.
The “real” unemployment rate, which accounts for discouraged workers and underemployment, climbed to 8%, the highest since October 2021. The number of part-time workers seeking full-time employment spiked by 460,000, marking a 10% increase.
Market Reactions and Economic Outlook
Economic analyst Jim Paulsen noted that the labor market is approaching “stall speed” and warned that current trends could fuel recession fears. While Goldman Sachs cut its GDP forecast for 2025 to 1.7% and increased its recession probability to 20%, most economists are not predicting a full-blown downturn.
Trump remains confident, stating, “What we’re doing is we’re building a tremendous foundation.” The administration continues to emphasize that tariff uncertainty and short-term disruptions are part of a broader strategy for long-term economic growth.
