Trump Admits Risk of Recession: Insights from WSJ on His Concerns About Economic Downturns

President Donald Trump recently faced a tough decision regarding his tariff plan. According to The Wall Street Journal, he was aware that his tariffs could lead the economy into a recession, and he wanted to avoid a bigger issue: a depression.

In financial terms, a recession is when the economy slows down, often shown by a rise in unemployment. A depression, however, is much worse, marked by prolonged economic decline and significant job losses like those seen during the Great Depression in the 1930s, when unemployment soared to 25%. Since then, the U.S. has managed to sidestep such a crisis thanks to improved policies and safety nets, like the FDIC.

Economists had speculated that Trump’s steep tariffs might choke global trade, hinting at a potential recession. Still, there was little forewarning of an impending depression. However, news about the tariffs had significant market reactions. In the days before Trump indicated he would ease some tariffs, bond yields rose sharply, and stock prices fell. After he announced the rollback, the stock market rebounded dramatically, with the S&P 500 having its best day since 2008.

Kevin Hassett, director of the U.S. National Economic Council, noted that a recent decline in the bond market likely influenced Trump’s decision. The yield on 10-year Treasury bonds had spiked, creating urgency around the need for policy changes. Hassett described how the situation prompted Trump to act more swiftly than he might have planned.

Trump himself commented that investors were getting anxious. He noted in a press conference that the market seemed overly reactive, causing him to rethink his approach. The influence of Treasury Secretary Scott Bessent also played a crucial role in shaping Trump’s trade policy decisions.

This situation illustrates a critical shift in how economic policies are shaped by both internal considerations and external market reactions. It shows the delicate balance leaders must maintain when navigating complex global trade issues.

For more insight on economic shifts and their implications, you might find resources from the Bureau of Economic Analysis particularly useful. They offer detailed reports that can provide context to these financial developments.



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