Trump’s pessimistic update raises recession fears, causing stock market to drop

Wall Street kicked off the week in the red as investors wrestled with economic uncertainty and fresh turbulence from Washington.

The Dow Jones Industrial Average slid 439 points early Monday, down about 1 percent, while the S&P 500 tumbled 2 percent. 

The tech-heavy Nasdaq fell the furthest, shedding 3.5 percent in morning trading.

Part of the stumble is likely attributed to President Trump’s weekend remarks.  

The President said in an interview with Fox News on Sunday that he was not ruling out the chance that his strong trade measures, such as imposing high tariffs on important American trading allies, might lead to a recession.

Maria Bartiromo, the host of ‘Sunday Morning Futures,’ asked Trump if Americans should expect a recession in 2025, and the President refused to rule it out.

‘I hate to predict things like that,’ he told Bartiromo. 

Monday morning’s stock falls come after Wall Street had its worst weekly performance in six months last week. All three major indexes ended the week at least 2.5 percent in the red. 

‘There is a period of transition, because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing, and there are always periods of, it takes a little time. 

‘It takes a little time, but I think it should be great for us.’

Before the Sunday comments, the ‘transition’ had already forced Washington to change its policy stances. 

In February, the Trump Administration launched 25 percent tariffs on all goods crossing the Canadian and Mexican borders. 

The President pulled the tariffs after the stock market reacted negatively to the border tax.

Then, the tariffs were re-introduced in early March, only then to be postponed again until April 2. 

When Bartiromo asked about the uncertainty around his policies, Trump responded that the tariffs ‘may go up,’ and that companies only complain about uncertainty to create a ‘sound bite.’ 

But the markets are sounding another alarm, losing billions in value in the early morning trading. They’re also bracing for a week that will see a tranche of freshly-released economic data. 

The new data includes the latest consumer sentiment reading from the University of Michigan and a New York Fed survey on consumer expectations. 

But the real focus is on inflation. The Consumer Price Index (CPI) drops Wednesday. 

The last CPI, the first index that included a period after President Trump’s inauguration, came in hotter than expected, with 3 percent inflation growth. 

The Fed has aimed to bring inflation down to 2 percent since peaks in summer 2022 reached over 9 percent.

The numbers coming out this week could spell widespread trouble for the economy.  

With slower growth, a cooling labor market, and inflation still lurking, Trump’s economic agenda – centered on historic inflation drivers like tariffs, mass deportations, and federal spending cuts – could test the economy’s resilience.

Experts have also warned that the economy could be headed towards stagflation – an outcome considered worse than a recession. 

Stagflation is when prices continue to soar at the same time as economic growth slows and unemployment rises. 

The tariffs, in particular, threaten to raise prices on everyday goods, squeezing consumers and slowing business growth. 

But Trump’s team is brushing off the concerns. 

Commerce Secretary Howard Lutnick told Meet the Press on Sunday that tariffs would supercharge economic growth: ‘I would never bet on recession,’ he said. 

‘No chance.’