President Donald Trump declined Sunday to rule out the possibility that the United States might enter a recession this year.
“I hate to predict things like that,” he told a Fox News interviewer when asked directly about a possible recession in 2025.
“There is a period of transition, because what we’re doing is very big — we’re bringing wealth back to America,” he said, adding, “It takes a little time.”
Trump’s commerce secretary, Howard Lutnick, was more definitive when asked Sunday about the possibility of a recession.
“Absolutely not,” he told NBC’s “Meet the Press” when asked whether Americans should brace for a downturn.
Trump’s intermittent threats of tariffs against China, Canada, Mexico, and other countries have caused financial markets in the US to tremble and consumers to be uncertain about the year ahead.
The worst week for stock markets since the November election just finished.
Consumer confidence metrics are declining as consumers, who have already been negatively impacted by years of inflation, prepare for the potential price increases brought on by tariffs.
And widespread government layoffs being engineered by Trump’s billionaire advisor Elon Musk add further concern.
When asked later Sunday to clarify his remarks on whether there could be a recession, Trump told reports on Air Force One “Who knows?”
Overall, the signs are mixed.
According to a closely followed Atlanta Federal Reserve indicator, real GDP growth in the first quarter of this year is expected to drop by 2.4 percent, the lowest outcome since the peak of the Covid-19 outbreak.
Trump’s changing tariff approach is largely to blame for the uncertainty as investors and businesses attempt to figure out what will happen next. Both the sectors being targeted and the effective dates have changed.
On ABC, Trump’s chief economic advisor Kevin Hassett was questioned about whether tariffs were mostly a temporary measure or if they would end up being permanent.
Hassett said that depended on the behavior of the countries targeted. If they failed to respond positively, he said, the result could be a “new equilibrium” of continuing tariffs.
The administration has insisted that while the economy will pass through a possibly bumpy “transition,” things are headed in a positive direction.
In his State of the Union message on Tuesday, Trump told Americans to expect “a little disturbance” as tariffs take hold, while adding: “We’re okay with that. It won’t be much.”
And his Treasury Secretary Scott Bessent has warned of a “detox period” as the economy cuts government spending.
Given the uncertainties, economists have been wary of making firm predictions.
Economists at Goldman Sachs, citing Trump’s policies, have raised their odds of a recession over the next 12 months from 15 percent to 20 percent.
And Morgan Stanley predicted “softer growth this year” than earlier expected.
Recessions are generally defined as two consecutive quarters of weak or negative GDP growth.
The US was briefly in recession in early 2020 as the Covid pandemic spread. Millions of people lost jobs.
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