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During his electoral campaign last year, Donald Trump promised the Americans that he would inaugurate a new era of prosperity.
Now two months after his presidency, he paints a slightly different image.
He warned that it will be difficult to lower prices and that the public should be prepared for a “small disturbance” before being able to bring wealth to the United States.
Meanwhile, analysts say that the chances of a slowdown increase, pointing their policies.
Is Trump about to trigger a recession in the greatest economy in the world?
Markets fall and the risk of recession increases
In the United States, a recession is defined as a prolonged and widespread decrease in economic activity generally characterized by a leap in unemployment and a drop in revenues.
A choir of economic analysts has warned in recent days that the risks of such a scenario increased.
A JP Morgan report put the risk of 40% recession, against 30% at the start of the year, warning that American policy “was moving away from growth”, while Mark Zandi, chief economist at Moody’s Analytics, increased ratings from 15% to 35%, citing prices.
The forecasts occurred while the S&P 500, which follows 500 of the largest companies in the United States, has greatly sank. He has now fallen at his lowest level since September in a sign of fears for the future.
The agitation of the market is partly taken by concerns concerning new taxes on imports, called prices, which Trump has introduced since his entry into office.
He struck the products of the three largest American business partners with new tasks and threatened them more widely in movements which, according to analysts, will increase the prices and growth of the sidewalk.
Trump and his economic advisers warned the public to prepare for economic pains, while seeming to reject market concerns – a change marked compared to his first mandate, when he frequently cited the stock market as a measure of his own success.
“There will always be changes and adjustments,” he said last week, in response to business calls for more certainty.
The posture has increased investor concerns about its plans.
Goldman Sachs last week raised his recession from 15% to 20%, saying that he considered policy changes as “key risk” for the economy. But he noted that the White House always had “the possibility of backing up if the risks start to be more serious”.
“If the White House remained attached to its very policies in the face of much worse data, the risk of recession would further increase,” said business analysts.
Prices, uncertainty and slowdown in growth
For many companies, the largest question mark is prices, which increase costs for American companies by putting taxes on imports. While Trump unveils the prices, many companies are now faced with lower beneficiary margins, while retaining investments and hiring when they try to understand what the future will look like.
Investors are also concerned about major reductions in government workforce and public spending.
Brian Gardner, head of Washington’s policy of Policy at the Investment Bank Stifel, said that companies and investors had thought Trump had prices like a negotiation tool.
“But what the president and his office report is actually a more important affair. It is a restructuring of the American economy,” he said. “And that’s what stimulates markets in the past two weeks.”
The American economy already underwent a slowdown, designed partly by the Central Bank, which maintained higher interest rates to try to cool the activity and stabilize prices.
In recent weeks, some data suggests faster weakening.
Retail sales fell in February, confidence – which had broken out after the Trump elections on several surveys of consumers and businesses – has fallen, and companies including large airlines, retailers such as Walmart and Target, and manufacturers warn a retreat.
Some analysts fear that a drop in the stock market could trigger a new repression of expenses, especially among high income households.
This could offer a major blow to the American economy, which is driven by consumer spending and is increasingly dependent on these richer households, because low -income families face the pressure of inflation.
Watch: how Trump’s stock market rhetoric has moved over the years
The head of the American central bank, Jerome Powell, offered insurance in a speech last week, noting that feeling had not been a good behavior indicator in recent years.
“Despite high levels of uncertainty, the American economy continues to be in the right place,” he said.
But the American economy is currently deeply linked to the rest of the world, warned Kathleen Brooks, research director at XTB.
“The fact that the prices can disturb this at the same time that there were signs that the American economy was weakening anyway .. really feeds fears of recession,” she said.
Ripe technology stock market for correction
Undo stock market discomfort is not all about Trump.
Investors were already nervous as to the possibility of a correction, after big gains in the past two years, driven by the net power of technological actions fueled by the optimism of investors on artificial intelligence (AI),
Chipmaker Nvidia, for example, saw its stock market lesson from $ 15 at the start of 2023 to almost $ 150 in November from last year.
This type of rise had aroused a debate on an “Bulle of AI” – with investors on alert for the signs of it, which would have a significant impact on the stock market, whatever the dynamics of the wider economy.
Now, with views of the darkening of the American economy, optimism about AI becomes even more difficult to maintain.
Deepwater Asset Management technological analyst Gene Munster wrote on social networks this week that his optimism had “led to a step back” when the possibility of a recession increased “measurably” during the last month.
“The main thing is that if we enter a recession, it will be extremely difficult for the AI trade to continue,” he said.
