Donald Trump built his presidency on promises of economic strength.
But as the markets tumble and businesses hesitate, the public is now worried that the US is heading for a recession.
But the answer isn’t simple, even if the warning signs are there.
The markets have lost trillions, consumer confidence is sliding, and businesses are feeling the strain of Trump’s unpredictable trade policies.
While the economy was strong when he took office in January, his aggressive tariff strategy has fueled uncertainty.
And if the pattern continues, the US could be on the verge of a downturn that didn’t have to happen.
Are markets signaling trouble?
The US stock market has seen sharp declines in recent weeks.
Since hitting an all-time high last month, the S&P 500 has lost more than $3 trillion in value.
Investors are reacting to Trump’s unpredictable tariff policies, which have hit major trade partners, including Canada, Mexico, and China.
One of the biggest concerns is how businesses are responding. Companies thrive on stability, but when policies change overnight, they hold back on spending.
That’s exactly what’s happening now. Businesses are delaying investments, hiring plans are being adjusted, and small businesses are raising prices to offset higher import costs.
The stock market isn’t the economy, but it reflects investor confidence. Right now, confidence is low.
How bad is consumer confidence?
Consumers drive the US economy. If they stop spending, businesses suffer, jobs are lost, and growth slows down. Right now, confidence is on the decline.
According to the latest CNN/SSRS poll, only 35% of Americans believe the country is on the right track.
That’s a problem. Consumer confidence tends to drop before a recession, and while one survey isn’t definitive proof, the downward trend is important.
Financial stress is also creeping in. Household debt is rising, and credit card and auto loan delinquencies are increasing.
This suggests that some Americans are struggling to keep up with their payments, a warning sign that economic pressure is mounting.
If wages don’t rise fast enough and interest rates remain high, spending will slow even further, and that’s the kind of squeeze that leads to job losses.
What do voters think about this?
The latest polling data suggests that most Americans disapprove of Trump’s economic management.
While his base remains somewhat loyal, frustration is building, and even Republicans are starting to question his policies.
The CNN/SSRS poll found that 56% of voters disapprove of Trump’s handling of the economy, the worst rating of his presidency. This is higher than at any point during his first term.
A Reuters/Ipsos poll echoed similar concerns. It found that 57% of Americans believe Trump’s economic policies are “erratic”, including one in three Republicans.
Source: Reuters
That’s a big change to what the public thought pre-election. While Trump has typically maintained strong Republican support, the trade war and market volatility are beginning to test their patience.
A separate Emerson College poll found that Trump’s disapproval rating has climbed to 45%, up two points in just a week.
The biggest concerns are, of course, tariffs, cost of living, and fears that the economy is heading in the wrong direction.
Is the US actually heading for a recession?
The short answer: Maybe, but not yet.
The economy is still growing. Unemployment remains low, and companies are still hiring.
But major banks are starting to sound the alarm. JP Morgan now puts the risk of a 2025 recession at 40%, up from 30% earlier this year.
Goldman Sachs raised its estimate from 15% to 20%. Those aren’t recession guarantees, but they show that experts are growing more cautious.
The real problem however, isn’t that the economy is weak. It’s that Trump’s policies are increasing the risk of something breaking.
The economy was strong when he took office. Now, it’s absorbing unnecessary shocks.
What happens next?
Trump could change course. It is not yet obvious if his policies are just power plays.
If he reverses tariffs and reassures businesses, confidence could return. But there’s no sign he plans to do that.
Instead, his administration has indicated that it’s willing to “endure short-term economic pain” for long-term gains.
The problem is, markets don’t believe those gains will come. Investors assumed Trump would step in if the economy stumbled.
But his new message suggests he’s fine letting markets drop and businesses struggle.
Meanwhile, Republicans in Congress could limit his tariff authority, although they haven’t yet.
Many privately oppose his policies but are reluctant to challenge him publicly.
That may change if economic conditions worsen and voters start blaming their elected officials.
For now, the US isn’t in a recession, but it’s flirting with one. And unless something changes, the risk will only grow.
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