{"id":10106,"date":"2025-03-11T11:12:33","date_gmt":"2025-03-11T03:12:33","guid":{"rendered":"https:\/\/tingchao.xyz\/?p=10106"},"modified":"2025-03-11T11:12:36","modified_gmt":"2025-03-11T03:12:36","slug":"wall-street-fears-trump-will-wreck-the-soft-landing","status":"publish","type":"post","link":"https:\/\/tingchao.xyz\/?p=10106","title":{"rendered":"Wall Street Fears Trump Will Wreck the Soft Landing"},"content":{"rendered":"\n
\"\"
President Trump has sidestepped questions about whether a recession could lie ahead.\u00a9\u00a0Win McNamee\/Getty Images<\/figcaption><\/figure>\n\n\n\n

For the past year, U.S. economic policymakers have been singularly focused on achieving a so-called soft landing that brings inflation down without a recession. Now, a new team of pilots are considering a course correction that, by their own acknowledgment, might tip the economy toward a hard landing.<\/p>\n\n\n\n

President Trump and his senior advisers in recent days have signaled indifference to rising risks that trade uncertainty<\/a> chills private-sector investment. They have argued a \u201cdetox\u201d might be needed in spending and hiring, that falling stock values<\/a> aren\u2019t a big worry, and that inflation could rise in the short run.<\/p>\n\n\n\n

In an interview that aired Sunday on Fox News, Trump sidestepped a question about whether a recession could lie ahead<\/a>. \u201cThere is a period of transition because what we\u2019re doing is very big,\u201d he said. \u201cWhat I have to do is build a strong country. You can\u2019t really watch the stock market.\u201d<\/p>\n\n\n\n

Given a chance to explain those comments later Sunday, Trump instead doubled down in remarks to reporters on Air Force One that evening. \u201cTariffs are going to be the greatest thing we\u2019ve ever done as a country. It\u2019s going to make our country rich again,\u201d he said.<\/p>\n\n\n\n

The comments roiled stock markets<\/a> on Monday. The Dow Jones Industrial Average fell 890 points, down 2.1%. The S&P 500 fell 2.7%, while the tech-heavy Nasdaq fell 4%, its largest decline since 2022. All three major indexes are now below their levels recorded on Election Day last November.<\/p>\n\n\n\n

Delta Air Lines said domestic demand had softened when it slashed its first-quarter earnings and revenue guidance after markets closed on Monday. The company saw a \u201cpretty significant shift\u201d in sentiment in February, and \u201cconsumer spending started to stall,\u201d said Chief Executive Ed Bastian on CNBC.<\/p>\n\n\n\n

Business travel has also softened. \u201cWhere there are places where people just aren\u2019t quite sure what\u2019s going to happen, companies are pulling back,\u201d he said.<\/p>\n\n\n\n

In recent days, advisers including Commerce Secretary Howard Lutnick have warned tariffs<\/a> could create a one-time increase in prices. Treasury Secretary Scott Bessent suggested the U.S. economy may need a reset following years of growth supported by federal spending and rising asset prices. \u201cWe\u2019ll see whether there\u2019s pain,\u201d he said Friday on CNBC.<\/p>\n\n\n\n

To be sure, Trump inherited an economy with steady growth and lofty stock markets but vulnerabilities from a frozen housing sector and a cooling labor market<\/a>. Investors began the year indifferent to those blemishes because they expected the new administration to focus on revving up growth. Stocks soared<\/a> after Trump\u2019s election in November as investors anticipated a bullish cocktail of tax cuts and deregulation, as occurred in his first year as president in 2017.<\/p>\n\n\n\n

\u201cPeople could only see the good side of what Trump was promising to do. That has basically evaporated, and now, we\u2019re back to recession watch,\u201d said Dario Perkins, an economist at GlobalData TS Lombard in London.<\/p>\n\n\n\n

Analysts saw the shift in tone from the president and his advisers in recent days as particularly portentous. The administration initially seemed to focus on talking down the risks of higher government bond yields from an uptick in inflation or by pre-emptively blaming the departing Biden administration for any growth scare.<\/p>\n\n\n\n

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Trump and his senior advisers have signaled indifference to rising risks that trade uncertainty chills private-sector investment.\u00a9\u00a0Al Drago\/Press Pool<\/figcaption><\/figure>\n\n\n\n

\u201cOn Friday, I would have said I thought the administration was worried about their policies really slowing down the economy, and they were trying to lay the groundwork for the narrative that they inherited a weakening economy,\u201d said Michael Strain, head of economic-policy studies at the right-leaning American Enterprise Institute.<\/p>\n\n\n\n

More recent comments seem to have gone beyond that.<\/p>\n\n\n\n

\u201cNow, there\u2019s almost a sense that if something goes wrong in the economy, then that\u2019s fine,\u201d said Perkins. \u201cThat\u2019s making people quite nervous because if you get to the point where you are pushing the economy into a recession, there is no guarantee that that\u2019s just going to pass quickly.\u201d<\/p>\n\n\n\n

Market economies tend to settle into their own equilibrium. An increase in spending and hiring sustains still more spending and hiring until some outside event\u2014a war, oil price shock, or large increase in borrowing costs\u2014knocks the economy off track, creating a negative feedback loop.<\/p>\n\n\n\n

Economists at JPMorgan Chase said Monday that the risk of a recession had edged up to 40% from 30% owing to \u201cextreme U.S. policies.\u201d Goldman Sachs, which has consistently anticipated above-consensus growth in recent years, now says it expects weaker growth than the rest of Wall Street. Its economists raised their 12-month recession odds to 20% from 15%.<\/p>\n\n\n\n

\u201cWe still think this is more of a growth scare than a recession,\u201d said George Mateyo, chief investment officer at Key Private Bank. \u201cThis is very much a man-made situation.\u201d<\/p>\n\n\n\n

The administration has taken Washington and Wall Street by surprise in recent weeks with a double-barreled blitz to slash the federal workforce and to threaten huge tariffs<\/a> on its largest trading partners. Trump has already imposed large tariff increases on China, hitting a range of goods such as consumer electronics and apparel that received exemptions six years ago.<\/p>\n\n\n\n

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Goldman Sachs now says it expects weaker growth than the rest of Wall Street.\u00a9\u00a0John Taggart for WSJ<\/figcaption><\/figure>\n\n\n\n

\u201cThe administration seems to be trying to test the boundaries of the economy\u2019s willingness to tolerate rising tariffs. And it doesn\u2019t quite know where those boundaries are,\u201d said Strain.<\/p>\n\n\n\n

Difficulty forecasting potential changes<\/a> to prices of imported goods means investment spending could \u201ctotally stall out in the first quarter,\u201d he said.<\/p>\n\n\n\n

Risks abound. For example, efforts to shrink the federal workforce<\/a> without a sustained rise in joblessness could rely on the private sector to absorb those workers. But are private-sector businesses prepared to do so when they don\u2019t know by what magnitude tariffs on goods and materials that they import are set to rise? The Trump administration, in running multiple policy experiments at once, risks upending a fragile \u201cslow-to-hire, slow-to-fire\u201d equilibrium that has defined the postpandemic economy.<\/p>\n\n\n\n

Strain said he was worried about the effects on consumer spending from anxious workers\u2014those directly employed by the federal government and millions more whose businesses rely on federal funding or contracts\u2014pulling back on purchases. Harvard University announced a hiring freeze on Monday.<\/p>\n\n\n\n

To be sure, the U.S. government has managed meaningful fiscal cutbacks in the past. The federal workforce shrunk by more than 10% between 1992 and 1998. But a steadily growing economy enabled that to occur without any meaningful disruption.<\/p>\n\n\n\n

In November, the share of households who expected their financial situation would improve over the coming year reached a 4\u00bd-year high, according to a New York Fed survey of consumers. The same survey, released Monday, showed the largest monthly drop in household financial sentiment last month since 2023. Expectations regarding the perceived probability of missing a debt payment rose to the highest level since April 2020.<\/p>\n\n\n\n

Some analysts cautioned that Trump\u2019s messaging may instead reflect a strategic effort to improve the country\u2019s bargaining posture with trading partners and to jawbone bond investors and the Federal Reserve to maintain a bias toward lowering rates. Already, Trump\u2019s impulsive trade and security behavior has prompted authorities in China and Europe to take steps to increase spending on economic stimulus and defense.<\/p>\n\n\n\n

Analysts said the past two weeks had been helpful in resetting expectations on Wall Street by showing Trump wasn\u2019t likely to change course based on a market selloff. \u201cHe is telling us, in everything he is doing, that he is not kidding around. On tariffs, he believes it in his bones,\u201d said Andy Laperriere, head of U.S. policy research at Piper Sandler.<\/p>\n\n\n\n

Laperriere referred to an anecdote recounted in Bob Woodward\u2019s 2018 book about how Trump\u2019s economic team worked behind the scenes to sand off the rough edges of his more belligerent trade posture. \u201cThere is no Gary Cohn to throw the Peter Navarro memo in the trash can. The people who are there are resigned to the fact that he\u2019s going to do what he wants on tariffs,\u201d he said.<\/p>\n\n\n\n

Business executives have said they would be more comfortable with larger-than-anticipated tariffs if they could at least have certainty about the administration\u2019s ultimate plans.<\/p>\n\n\n\n

\"\"
The administration\u2019s tariffs threats have taken Wall Street and Washington by surprise.\u00a9\u00a0Hannah Beier\/Bloomberg News<\/figcaption><\/figure>\n\n\n\n

In the interview Sunday, Trump pooh-poohed that desire for clarity by suggesting that \u201ctariffs could go up as time goes by.\u201d Pressed that his answer did little to resolve businesses\u2019 anxieties, Trump responded by attacking multinational companies: \u201cFor years, the big globalists have been ripping off the United States.\u201d<\/p>\n\n\n\n

Laperriere said investors were right to worry that policies could veer toward chaos rather than moderation if growth does suffer. \u201cInstead of a weak economy forcing Trump to reconsider his policy agenda, it\u2019s far more likely to cause Trump to consider other policies that are disruptive to the economy,\u201d such as a more aggressive effort to challenge the Fed to cut interest rates, he said.<\/p>\n\n\n\n

Because tariffs are likely to send up prices at least in the short run, officials at the Fed are likely to move more slowly to cushion the economy from potential threats to growth than they were last year, when interest rates were higher and inflation was steadily declining.<\/p>\n\n\n\n

\u201cYou can\u2019t be sure that the monetary policy response is going to be forthcoming quickly enough to break that potential feedback loop. That\u2019s the worry here,\u201d said Perkins.<\/p>\n","protected":false},"excerpt":{"rendered":"

For the past year, U.S. economic policymakers have been singularly focused on achieving a so-called soft landing that brings inflation down without a recession. Now, a new team of pilots are considering a course correction that, by their own acknowledgment, might tip the economy toward a hard landing. President Trump and his senior advisers in […]<\/p>\n","protected":false},"author":11,"featured_media":10107,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[12],"tags":[3170,3169,1724],"class_list":["post-10106","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-usa","tag-landing","tag-soft","tag-trump"],"yoast_head":"\nWall Street Fears Trump Will Wreck the Soft Landing - LISTEN WORLD<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/tingchao.xyz\/?p=10106\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Wall Street Fears Trump Will Wreck the Soft Landing - LISTEN WORLD\" \/>\n<meta property=\"og:description\" content=\"For the past year, U.S. economic policymakers have been singularly focused on achieving a so-called soft landing that brings inflation down without a recession. 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