Donald Trump has promised to guide him through a new “golden age” for the US economy. This week, his first quarter report card came in, and New Age is off to a chaotic start.
Gross domestic product (GDP) suddenly turned negative after a robust growth spell as trade distortions and weak consumer spending weakened activity.
It took the US president all 43 minutes to distance himself from Dismal Reading, which was released on Wednesday morning.
“Our country will be booming, but we need to remove Biden’s ‘overhangs’,” Trump wrote on his social media platform, Truth Social. “This takes a while and has nothing to do with tariffs. It’s just that he left us with a bad number, but when the boom starts, it’s unlikely to be anything else. Hold on!!!”
Trump says that the bad numbers are Joe Biden’s fault, but this attribution doesn’t extend to the good.
A strong employment report in March showed how the private sector is roaring under President Donald J. Trump, according to a statement issued by the White House. “It’s already working,” the president declared the day it was published.
However, April’s Buoyant Jobs report, released Friday, prompted a more slimy response. He writes: “Like I said, we are just in the transition phase.
So which is that? Is America’s “golden age” going smoothly? Or will it take a while?
Growth in the first three months of this year has been heavily challenged by the new administration’s plans to overhaul the global economy, even though Trump wants to blame for the 19 days he has not yet taken office. U.S. goods imports skyrocketed 41% as businesses scrambled to preempt tariffs, but consumer spending for durable goods fell 3.4% as emotions were exposed to pressure.
And the first quarter numbers raised the second annoying question. The activity was largely weakened as businesses supported most of Trump’s tariffs, which he only announced in early April. It is widely expected that those companies and their customers will ultimately respond to their tariffs and the chaos around them will have a major impact on growth.
Oliver Allen, senior US economist in Pantheon Macroeconomics, has observed a volatile development since the end of the first quarter, where Trump has “dramatically changed the photos” of 10% tariffs on goods from most of the world, and 145% of China. “With substantial new tariffs, spending on spending from pre-duty purchases will be released quickly.
“Consumer spending also decreases as it hits confidence and real revenue from higher prices, but intense uncertainty leads to a freeze in business investments, particularly exports to China.”
It’s too early to say whether tariffs that the administration claims to stimulate the US economy will actually set the stage for a recession: two consecutive quarters of contraction. With Trump’s clock, the landscape moves rapidly one day to the next, not to mention the entire quarter.
Trump is right. Most of his tariffs are not blamed for a spectacular reversal of first quarter growth. The US hiked only missions in China, and last month taxed blankets 10% on many other countries for the second quarter several days.
The potential Trump foundation was not in the early months of the year by tariffs themselves, and not placed by their execution by his administration.
From repeated jerks and shocks around Canada and Mexico’s cleaning duties to the announcement of “mutual” tariffs of dozens of countries ultimately imposed in less than a day, widespread turmoil and uncertainty are embedded in the world’s largest economy. The companies in it are not happy.
Trump’s Treasury Secretary Scott Bescent has coined an interesting term for this threat, play and social media broadside playbook. “President Trump will create what I call ‘strategic uncertainty’ in negotiations,” he held a press conference Tuesday. “When we start moving forward and announce a deal, then there’s certainty. But certainty isn’t necessarily a good thing in negotiations.”
Trump and his officials find “strategic uncertainty” during trade negotiations, but have different outcomes for those paying repeatedly guaranteed bills, trying to grow their business in a market with leaders trapped in the war of words with the White House, or planting crops without knowing what economic reality is by the time of harvest.
Trump took office last November after gaining substantial support for rural and low-income voters. For Republicans to remain in power in Washington during their second term, he will need to maintain his base.
Polling suggests that these groups are of concern. Released this week, the PBS News/NPR/Marist Survey found that 48% of rural voters who are unhappy with Trump’s handling of the economy are recognized. The same was true for 57% of voters with household incomes under $50,000.
As anxiety grew, the US president tried to downplay the risks. In one of the more distinctive moments in another strange week, he appeared to play the threat of empty store shelves.
“Well, maybe the kids have two dolls instead of 30 dolls,” Trump said at cabinet meeting Wednesday. “And perhaps two dolls would cost a few dollars more than usual.”
“There are ships in China where things are packed, but many of them aren’t all of them, and not many of them,” he continued.
Usually, it’s about American consumers, not the president, to decide what they do or not to buy. For men whose wealth and image are built around consumption, the comments looked very out of brand. “Barbie’s Skimp” read the Trump-friendly New York Post front page. It’s still early for Trump. But the discussion of Biden’s “overhang” has already faded. It is up to the voters, not the president, to make a verdict on how the economy is handled.