The Trump Slump is now

You can't take a battering ram to every major institution in America and expect the economy to do well

Robert Reich Mar 10

Friends,

Apologies for intruding on your inbox for a second time today, but the message we’re getting from stock and bond markets deserves your attention.

Recall that Trump was elected largely because Americans thought the economy was lousy and believed him when he said he’d fix it.

Now, seven weeks after his inauguration, the bottom is falling out. Stocks are plunging. Treasury yields are falling. Consumer confidence is dropping. Inflation is picking up.

Over the weekend, Trump refused to rule out a recession this year, telling Fox News there will be a “period of transition, because what we’re doing is very big.”

Well, yes, if “very big” means destroying much of the federal government, allying with Putin against our traditional allies, and putting high tariff walls around America.

The cost of living — the single biggest problem identified by consumers over the last several years — is going up, not down. Trump’s tariffs on steel and aluminum, and his threatened 25 percent tariffs on Canada and Mexico, are playing havoc with supply chains inside and outside America.

Trump’s trade war with China intensified today as China began imposing retaliatory tariffs on a wide range of American farm products. Food prices are rising.

Corporations are pulling back from investing in new productive capacity — additional jobs, equipment, factories — because Trump’s and Musk’s chaos makes it impossible for them to gauge what the future will bring. Joblessness is rising.

The S&P 500 was down more than 2 percent in this morning’s trading — after last week’s 3.1 percent drop (the biggest drop in six months) — signaling that investors are spooked.

Tesla's stock tumbled more than 8 percent this morning. Shares of Apple, Microsoft, Alphabet, Amazon.com, Nvidia and Meta Platform fell more than 2 percent.

Long-term bonds — which reveal investors’ expectations about the economy over the next decade — are also down. They expect hard times. The 10-year U.S. Treasury yield slipped below 4.23 percent (it had settled Friday above 4.31 percent).

Even before this Trump slump, only the richest 10 percent of Americans had enough purchasing power to keep the economy going with their spending. The bottom 90 percent — including most Trump voters — were barely getting by. The next eighteen months could be rough on millions of people.

Will the Trump slump turn into a recession? How will Trump lie and cheat his way out of it? Stay tuned.