Presidents usually do everything possible to avoid recessions, to the point that they even avoid pronouncing the word.
But President Donald Trump and his advisors have offered a very different message in recent weeks. Yes, a recession is possible, they have said. Maybe one wouldn’t be so bad.
Howard Lutnick, secretary of Commerce, has said that Trump’s policies “are worth it” even if they cause a recession. Scott Besent, secretary of the Treasury, has said that the economy may need a “detoxification period” after becoming a public spending. And Trump has said that there will be a “transition period” when his policies enter into force.
In part, these comments may reflect an effort to align political statements with economic reality. Trump promised to end the inflation “from day one” and declared, in his investiture speech, that “the Golden Age of the United States begins right now.”
Instead, inflation has remained firm, and although Trump has been in office for less than two months, economists warn that it is likely that their tariffs will get worse. The confidence measures of consumers and companies have plummeted and the prices of the actions have collapsed, which is largely attributable to Trump’s policies and the uncertainty they have caused.
“It is the type of language you use when your policy is not going well and you can see that it is actively harming people,” said Sean Vanatta, financial historian of the University of Glasgow, in Scotland.
The Trump government and its supporters argue that its objectives go beyond political messages. They claim that they intend to reduce imports, recover jobs in the manufacturing sector and “reindustrialize” the US economy. Even if doing so requires higher prices in the short term, they argue, US workers will win at the end.
“The short -term pain compensation for long -term gain can be very real and something important to be pursued,” said Oren Cass, founder of American Compass, a conservative research organization that has supported many of Trump’s economic policies. “Actually, it is incredibly encouraging to see that we can have some political leaders willing to speak honestly about it.”
But even Cass was critical of the government’s intermittent approach regarding tariffs, who said he could undermine the effectiveness of said policy.
And although many economists sympathize with the idea that presidents must sometimes cause temporary difficulties in the search for long -term objectives, few are willing to defend the specific policy set that Trump’s government is adopting.
“The idea of short -term pain to obtain long -term benefits is not a crazy idea in itself,” said Greg Mankiw, a Harvard economist who was president of the Council of Economic Advisors of President George Bush. But Trump’s commercial policies, he said, are “short -term pain to obtain more long -term pain.”
Commercial wars, tariffs and prices
A form of short -term pain that Trump and his assistants have recognized is that tariffs will raise the price of imported goods. Besent has framed it as a necessary, although difficult, to unhook the US economy of cheap foreign products, especially those from China.
“The American dream does not depend on the cheap chucheías of China,” Besunt said Sunday at Meet The Press. “It’s more than that. And we focus on affordability, but they are mortgages, they are cars, they are real salary gains.”
However, most economists reject the idea that import reduction will leave Americans in a better general situation. They recognize that the competition of lower -cost foreign producers has harmed some American industries, but has made the richest Americans on average: the lowest prices are actually a salary increase, which leaves consumers more money to spend on goods and services.
But even if the objective is to reduce imports, economists claim that generalized tariffs such as those Trump have threatened and tax will be ineffective. This is because tariffs not only affect consumer goods, but also the pieces and materials that US manufacturers use to manufacture their products, which makes them more expensive for national and foreigners consumers.
“If your goal is reindustrialization, I think they will realize that in reality the tariffs make them back,” said Kimberly Clausing, a professor at the University of California at Los Angeles, who worked in the Department of the Treasury during the Joe Biden government. “Manufacturing things in the United States is much more difficult when all inputs are more expensive.”
In recent years, some economists have been more skeptical about the orthodoxy of their profession about free trade. David Author, MIT economist, has carried out an influential research in which he has discovered that the avalanche of cheap products from China from the year 2000 caused the rapid destruction of jobs in the American manufacturing sector, leaving many workers and communities in the worst long -term situation, an episode that is known as the “Chinese shock”.
But current tariffs cannot reverse a clash that occurred decades ago, author, in addition, in any case, does not make much sense to try to recover textile and large furniture factories that the Chinese shock eliminated.
Instead, said author, legislators should focus on preserving and strengthening the most value manufacturing industries that promote innovation. Tariffs can be part of that strategy, he said, but must focus on specific sectors and combine with subsidies to promote investment. The Biden government followed that strategy with laws that promoted the investment in the manufacture of semiconductors and green energy, but Trump, for now, has abandoned it.
“It can’t be just a story of tariffs,” said author. “There must be investment.”
Deficit and expense
Economists are more understanding with another of Besent’s arguments: that the economy has become too dependent on public spending.
Economists throughout the political spectrum agree that the government should not incur multimillionaire deficits during a period of low unemployment, when tax revenues are normally high and public spending is not necessary to stimulate growth. Cutting the deficit can now be difficult – when requiring spending cuts and tax increases – but waiting until the deficit becomes a crisis would be much more.
“The more we hope, the greater the pain,” said Alan Auerbach, economist at the University of California in Berkeley, who has been studying the federal budget for decades.
The problem, according to Auerbach and other economists, is that nothing proposed by the Trump government would make a significant dent in the deficit. The Elon Musk government efficiency department has cut jobs and closed programs, but those efforts only affect a small fraction of the federal budget.
The Republicans of the Congress, in the budgetary framework that they approved last month, proposed more substantial cuts by leading to an important program, Medicaid. But instead of accompanying those cuts with tax rises, the Republican Plan would extend the tax cuts of Trump of 2017, which would ultimately mean a huge increase in the deficit.
Who assumes costs?
The 2017 fiscal cuts benefited disproportionately to homes with higher income, according to most independent analysis. The cuts in Medicaid would overwhelmingly harm families with low and moderate income, as well as cuts in other government services. Likewise, tariffs are usually harder for the poorest households, who spend most of their income on food, clothing and other imported goods.
In other words, the short -term pain created by government policies could fall more hard on Americans with low income, many of whom voted for Trump in the hope of improving their economic situation.
“It is really difficult to see how Trump’s voters would win,” said Clausing, a treasurer. “The prices will be higher, the alterations will be higher and the security network will suffer cuts.”
Even some defenders of Trump’s policies, such as CASS, say that cutting benefits to pay the tax cuts goes against the declared objective of the government to restore the middle class.
“The fiscal part of this is definitely a confusing factor,” he said.
In addition, a recession would be especially hard for workers with lower and less trained wages, who are disproportionately black and Hispanics, said Jessica Fulton, a policy vice president of the Joint Center for Political and Economic Studies, a research organization focused on issues that affect black people.
And even if a recession lasts little, the damage may not be. Economic research has shown that people who lose their jobs in a recession, or who graduate from school in one, may suffer long -term professional consequences.
“Talking about causing temporary damage ignores the fact that people will feel the results of the decisions made by this government for years,” said Fulton.
Ben Casselman is the main economy correspondent for the Times. He has been informing about economics for almost 20 years. More from Ben Casselman