Stock market continues to fall, Trump's 'transitional' recession, corporate confidence 'continuously falling'
After promising enormous wealth to Americans and becoming president, the stock market has been diagnosed as 'entering a recession', and the president, who was the one who made the promise, indirectly acknowledged the recession by answering as 'transitional'.
The US stock market plunged on the 10th, and in an interview with conservative media outlet Fox News the day before, President Trump answered the question about 'economic recession' by saying, "transitional" and "it will take some time."
The US small business confidence index in February came out as 'declining for the third consecutive month'.
The National Federation of Independent Business announced on the 11th that "the Small Business Optimism Index in February fell 2.1 points to 100.7." Reuters reported on the day that the confidence index fell, saying, “This reflects the decline in consumer and business confidence and the decline in the stock market, all of which have eliminated the so-called ‘Trump bump,’” and that “the NFIB’s uncertainty index rose 4 points to 104, the second highest level ever.”
On the 6th, the IMF said, “If the U.S. continues to impose tariffs on Mexico and Canada, it will have a significant negative impact on those countries,” and that the decline in U.S. Treasury yields was due to “the market reassessing the outlook for monetary policy in particular.”
On the 10th, the New York Times said, “Trump promised an ‘unprecedented economic boom’ as a presidential candidate, but now, eight weeks into his presidency, he refuses to rule out a recession,” and “For someone who entered the White House amid widespread economic discontent with the promise to ‘make America livable again,’ he has shown a surprising change in tone and message.”
Trump’s “transition” remarks came as the stock market plunged, and the New York Times reported that JPMorgan and Goldman Sachs, the two largest investment banks in the United States, released a report predicting that “Trump’s tariffs have made a recession more likely next year.”
The U.S. stock market saw its worst daily decline in three weeks of selling on the 10th, with the S&P 500 index falling 2.7% on the day, following a 3.1% drop last week.
The index was about 9% lower than last month’s record, down more than 10% from its recent high and approaching a “correction” in Wall Street’s stock market jargon.
The Nasdaq, which had already entered a “correction” last week after a sharp decline from its enthusiasm for artificial intelligence, fell another 4% on the 10th.
Tesla plunged more than 15%, while Alphabet, Apple, and Nvidia each fell more than 4%. European stocks hit a record high last week, with the index of the largest listed companies in the euro zone down 1.3%.
The yield on the 10-year U.S. Treasury note fell to 4.22% as relatively safe bond options increased amid the market decline. Bond prices move inversely to yields.
Reuters reported on the 10th under the title, “U.S. tariff chaos raises recession risk in all three North American countries,” that “risks are building for the Mexican, Canadian and U.S. economies amid deep uncertainty among companies and decision makers due to the turbulent implementation of U.S. tariffs, according to a poll of economists,” and that “the Fed is taking a wait-and-see approach for at least several months as inflation risks in the U.S., which were already rising, worsen, and recession risks in Mexico, Canada and the U.S. are also increasing,” “Given the uncertainty and the fact that there are new announcements every hour, it’s hard to deny that the environment is going to look like this, and that the risk of a recession is growing,” Jonathan Miller, senior U.S. economist at Barclays in New York, told Reuters. “People are holding back on spending, and that could hurt growth or, if growth is strong enough, it could hurt inflation, and there are risks in terms of both higher inflation and lower economic activity.”
The New York Times said, “Business leaders are spooked by the uncertainty surrounding Trump’s tariffs,” and “even some Republicans who fear retaliation if they go beyond the president are beginning to raise concerns about Trump’s burden. This moment presents a fundamental challenge to Trump, who is now confronted with the inevitability of governing on the promises he has made as an absolute and sweeping campaign promise.” President Trump repeatedly said in his campaign speeches in October last year that “we will usher in a new era of skyrocketing incomes,” adding, “Soaring wealth. Millions of new jobs. A booming middle class. We will have a boom like we’ve never had before.”
In an interview broadcast on Fox News on Sunday (9th), President Trump hesitated for a moment when anchor Maria Bartiromo asked, “Do you expect a recession this year?”
He continued, “I hate predicting things like that,” and “What we’re doing is so big that there’s a transition period. We’re bringing wealth back to America. It’s a big deal. And there’s always a period of time when it takes a little bit of time. It takes a little bit of time, but I think it’s going to be good for us,” in an unusually long-winded response.
His answer was an indirect acknowledgment of the “recession” in the economic cycle, saying, “It takes time and there’s a (certain) period to bring wealth back to America.”
Trump’s problem is timing,” said Stephen Moore, an economist at the Heritage Foundation and a former Trump economic adviser, to the Times. “Trump should have waited until Congress passed a tax cut bill to impose tariffs.”
“First, let the economy get going again, and then talk about tariffs,” Moore continued, confirming the failure of the conservative strategy of “tax cuts, then tariffs,” saying, “I think there needs to be a bit of a shift in priorities.”
When the Times asked, “The question hanging over Washington is how long can Trump afford a falling stock market and the negative press that comes with it?” Moore acknowledged that he had been hit by the stock market decline, saying, “I don’t know.” “That’s a good question. I think the president is worried about what the stock market has lost in the last 10 days. We all are.”
A Reuters survey of economists conducted across Canada, the United States and Mexico last week found that 70 out of 74 economists said they believed the risk of a recession had increased, meaning that virtually all economists responded that their economies were at risk of a recession.
“The U.S. tariffs on Mexico and Canada, the new tariffs on China, and the announced countermeasures by China, Canada and potentially Mexico are important new developments,” IMF spokeswoman Julie Kozak said on the 6th. “The period of sustained heightened uncertainty may be related to hesitation in consumption and investment decisions by both households and businesses.”
“The world economy is in the midst of significant changes, including rapid advances in artificial intelligence technology, changes in capital flow patterns and a decline in trade, which has been the engine of global growth, with a 3% growth rate between 2000 and 2019,” Kozak said. “Financial market volatility is increasing and global uncertainty indicators are rising.”
“I think this movement suggests that the market is reassessing or possibly reassessing its views on the outlook for monetary policy in particular,” Kozak said in response to a question about the “downtrend in U.S. Treasury yields starting in early 2025.”
President Trump announced the names of five digital assets, including the new U.S. Strategic Reserve for cryptocurrencies, via Social Truth on the 2nd. The entire cryptocurrency market rose by about 10% (over $300 billion) in the hours following the announcement, Reuters reported on the 4th.
Kimberly Clausing, a professor of tax law at UCLA Law School, analyzed the “trial to make the tax system much more favorable to the interests of the wealthy” and “discriminatory tax policy for the working class” in a NYT column (February 21) titled “The Real Reason President Trump Is Pushing Tariffs.”
Professor Clausing said, “Trump wants to consolidate his power while shifting the tax burden from the wealthy to the poor and the middle class.” “The poor spend a greater share of their income on things they want or need, including imported goods, rather than saving or investing a greater share of their income than the rich, so tariffs act as a drastically regressive tax. Tariffs were announced as a tax increase for the poor and the middle class to raise money for tax cuts for the wealthy.”
He said, “Because the overseas income of American companies is taxed much more lightly than their domestic income, they encourage overseas business,” and “Tariffs do not send jobs back home, or even support American manufacturing.” No, it's to make the rich richer. To do that, President Trump aims to reduce the tax burden on corporations and the wealthy, and through tariffs, he is doing exactly that," he said.