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Talk of recession is ramping up at the moment with a surprising twist from the Trump administration, which is suggesting that Americans may need to endure some pain.
Investors are coming to terms with the reality of President Donald Trump’s tariff policy. Job growth seems shaky. Consumer confidence has dropped. And there are renewed concerns about inflation. Whether all of that sparks a recession – a downturn that is spread across the economy and protracted in length – remains to be seen, although most economists still place the likelihood of a recession at less than 50%.
The attitude of Trump and his economic advisers is full steam ahead with tariffs and Trump’s nationalist, bullying attitude toward foreign countries, even if it triggers a downturn. The pain a recession would impose on Americans and the economy might be a fair trade, they believe, for imposing their vision of an economy less dependent on taxpayer money and more robust in domestic manufacturing.
Treasury Secretary Scott Bessent said the economy has an addiction that needs kicking.
“The market and the economy have just become hooked,” Bessent told CNBC this month. “We’ve become addicted to this government spending, and there’s going to be a detox period.”
He’s not alone in anticipating people might suffer from the withdrawal, even if there’s not a full-on recession.
Trump referred during a Fox News interview this month to a possible “transition period,” although he has declined to predict a recession.
Commerce Secretary Howard Lutnick told CBS News a recession would be “worth it” to enact Trump’s policies, although he said he doesn’t think one is coming.
If there is a recession, which is not something anyone should be hoping for, the Trump administration’s acknowledgment that it might be necessary or worthwhile will mean that they own it.
Each recent recession is associated with a particular crisis.
Pandemic Recession in 2020: It’s kind of surprising that the recession associated with Covid-19 was relatively short, although it was extremely severe. It was mitigated by massive amounts of government spending.
But this recession coincided with Trump’s election loss.
Great Recession from 2007 to 2009: Sparked by the housing bubble and the subprime mortgage crisis, among other things, the Great Recession saw a protracted spike in the unemployment rate. This recession is associated with the beginning of the Obama era.
The Dotcom Bust: The recession is pegged to 2001, although the bursting of the dotcom bubble that precipitated that recession may have soured the national mood heading into the 2000 presidential election that saw Al Gore narrowly lose to George W. Bush.
If you’re seeing a theme there, it’s that recessions lead to political frustration, although the US has arguably been in a period of turmoil for the entire Trump era.
Trump is constitutionally ineligible to seek reelection in 2028, but that does not mean a recession, even a short one, wouldn’t hurt him or Republicans. More importantly, higher unemployment and the economic pain resulting from a recession would hurt most Americans.
Recessions from further back in history bear out the idea that voters punish presidents in power during a recession. A recession in 1990 sparked by the savings and loan crisis in 1990 probably hurt President George H.W. Bush, who lost to Bill Clinton in 1992.
A recession in 1980 clearly helped cost President Jimmy Carter his bid for reelection.
(For more on the private, nonprofit organization that determines when a recession occurs, and how that doesn’t usually happen until after the recession, read this from CNN’s Alicia Wallace.)
“I worked for two administrations that inherited recessions and tried to get out of them,” said Rahm Emanuel, the CNN political commentator and former Chicago mayor who served as a top aide to Presidents Bill Clinton and Barack Obama. “I’ve never seen an administration try to drive toward a recession.”
Mark Zandi, chief economist of Moody’s Analytics, told CNN Wednesday that Trump’s policies, particularly raising taxes on imports through tariffs, are actively courting a downturn.
“We can talk ourselves into recession, but this one feels like we’re being pushed into recession,” Zandi told CNN’s Rahel Solomon this week.
Economists of all stripes still say the likelihood of a recession is low, but rising.
UCLA’s Anderson School of Business has placed the country on a “recession watch,” arguing that “if fully or nearly fully enacted,” Trump’s vision for a new economy could cause a downturn in the next year or two.
“What’s more, the recession could end up being stagflationary,” according to UCLA, suggesting the economy could stagnate at the same time prices rise through inflation.
Larry Summers, the treasury secretary during the Bill Clinton administration who also served in the Obama administration, told CNN this week that he hopes Trump can be convinced – by courts, Congress or public frustration – to moderate his policies on tariffs and government cuts.
“But if that doesn’t happen, we are headed back towards stagflation with both recession and rising prices that will be much more serious than what we are seeing today,” Summers said.
Federal Reserve Chairman Jerome Powell, referring to these and other assessments, admitted at a press conference this week that likelihood of a recession “has moved up, but is not high.”
Recession concerns don’t always turn into recessions. While Americans were bearish on the US economy for all of President Joe Biden’s presidency and rising prices due to inflation soured the national mood, a recession did not materialize, at least not technically. Democrats lost the 2024 election anyway.
