Markets are struggling, and investor confidence has plunged into “extreme fear.” Consumer confidence has dropped sharply, with surveys showing a significant shift in Americans’ views about their financial futures. Any positive news is seen by economists as the “calm before the storm.”
The main issue is pure uncertainty—especially concerning how President Donald Trump’s broad policy actions might play out, according to economists.
When discussing the economy, unstable markets, shaken confidence, and sudden fears of a recession, Trump has continued to blame the Biden administration, calling the economic situation he inherited “catastrophic,” a “nightmare,” “horrible,” or “damaged.” However, despite the data, the economy did not feel good to many Americans who suffered from the highest inflation in decades, and this dissatisfaction helped Trump win a second term.
These claims have been criticized by economists, statisticians, academics, and fact-checkers: By most reliable measures, President Joe Biden handed Trump a strong economy. “The economy was struggling under Biden, as shown by last year’s polls, but inflation and other economic indicators were relatively stable when Trump took office,” said Jai Kedia, an economist and research fellow at the Cato Institute in an interview with CNN. What’s unfolding now, Kedia said, is just another example of the political blame game.
Kedia, who is a Libertarian, believes politicians should “leave things alone” when it comes to economic matters. “This was the case with the Biden administration’s huge spending bills, which partly led to inflation; and now, we’re seeing it with the tariffs,” he said. “It’s hard to see why the previous administration should be blamed. The stock market actually rose when Trump was elected, and only recently, with the administration’s risky economic ideas, has the economy started to shift.”
“That shift is directly tied to tariffs and other economic proposals,” he added.
Economic data comes with many caveats: A single month’s data doesn’t determine a trend, figures are often revised, reports can be influenced by temporary factors like weather, and it takes time to fully understand economic situations.
“This is a problem across the political spectrum—cherry-picking a single month’s reports to make broad conclusions,” Kedia said.
For instance, Biden took credit for “creating” nearly 16 million jobs during his time in office, while Trump recently highlighted a small boost of 10,000 manufacturing jobs in the February report, crediting it to his tariff-heavy policies and push to make America a manufacturing powerhouse.
Both claims have some truth but need clarification: Biden should note that around 9.5 million of those jobs were to bring employment back to pre-pandemic levels; Trump’s numbers are preliminary and may reflect investments made during the Biden administration.
“It’s too early to know the full impact of tariffs on manufacturing and the economy,” Kedia said. “The markets are showing where they think this is heading.”
This uncertainty is fueling recession fears. “It’s not a large enough shock to cause a recession, but it will slow growth,” said Joe Brusuelas, chief economist at RSM US.
Brusuelas’ firm recently raised its recession probability to 20% from 15%. If this uncertainty turns into a sustained trade shock, they would revisit those projections.
“If the shock stems from a specific trade policy, it’s likely the blame or credit will fall on the Trump administration,” Brusuelas said. “But the administration has already set the stage to blame Biden.”
To be fair, confidence surveys aren’t always reliable indicators of future economic performance, said Sung Won Sohn, professor of finance and economics at Loyola Marymount University. “There’s so much uncertainty right now, it’s like a thick fog. We can’t tell which direction we’re heading,” he said. “Once the fog clears, confidence will rise. So, I wouldn’t use business or consumer confidence as an indicator of how the economy will perform in the future.”
