In a Fox News interview aired Sunday, President Donald Trump refrained from ruling out the potential for the U.S. to experience a recession in 2025.
“I hate to predict things like that,” Trump said when asked directly about the possibility of a downturn in the coming year.
He explained that “there is a period of transition, because what we’re doing is very big — we’re bringing wealth back to America,” and added, “It takes a little time.”
However, Trump’s commerce secretary, Howard Lutnick, was more definitive when NBC’s “Meet the Press” asked him about the likelihood of a recession.
“Absolutely not,” Lutnick responded, when asked if Americans should prepare for an economic slowdown.
Trump’s inconsistent tariff threats against countries like Canada, Mexico, and China have contributed to financial instability in the U.S., leaving consumers uncertain about what the rest of the year holds.
The stock markets recently concluded their worst week since the November election, and measures of consumer confidence have declined. With inflation still weighing heavily on shoppers, many are concerned about the higher costs that tariffs could bring.
Adding to the unease are government layoffs orchestrated by Trump’s advisor, Elon Musk, a billionaire who is overseeing significant cutbacks, further raising anxiety.
Economic indicators are showing mixed signals. A prominent index from the Atlanta Federal Reserve now forecasts a 2.4 percent contraction in real GDP growth for the first quarter of the year, which would mark the worst performance since the peak of the Covid-19 pandemic.
Much of the current uncertainty is tied to Trump’s unpredictable tariff policies, as their effective dates and targeted industries have fluctuated, leaving businesses and investors struggling to anticipate the next move.
Kevin Hassett, Trump’s chief economic advisor, was asked on ABC whether tariffs were intended to be temporary or could become permanent.
Hassett indicated that the future of tariffs would depend on how the targeted countries responded. He suggested that if the responses were not favorable, the tariffs could result in a “new equilibrium” with long-term consequences.
Despite these challenges, the Trump administration has maintained that the economy, while undergoing a “transition,” is on a positive trajectory.
In his State of the Union address on Tuesday, Trump reassured Americans that they should expect “a little disturbance” as tariffs are implemented, adding, “We’re okay with that. It won’t be much.” Additionally, Treasury Secretary Scott Bessent has cautioned that the economy will likely go through a “detox period” as government spending is reduced.
Given the current volatility, economists have been cautious about making definitive predictions. Goldman Sachs economists, citing the impact of Trump’s policies, have raised the probability of a recession in the next 12 months from 15 percent to 20 percent. Morgan Stanley, on the other hand, has forecasted “softer growth this year” than initially anticipated.
Recessions are typically defined as two consecutive quarters of negative or weak GDP growth. The U.S. briefly entered a recession in early 2020 due to the Covid pandemic, leading to widespread job losses.
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