Talk of recession is ramping up at the moment with a surprising twist from the Trump administration, which is suggesting that Americans may need to endure some pain.
Investors are coming to terms with the reality of President Donald Trump’s tariff policy. Job growth seems shaky. Consumer confidence has dropped. And there are renewed concerns about inflation. Whether all of that sparks a recession – a downturn that is spread across the economy and protracted in length – remains to be seen, although most economists still place the likelihood of a recession at less than 50%.
The attitude of Trump and his economic advisers is full steam ahead with tariffs and Trump’s nationalist, bullying attitude toward foreign countries, even if it triggers a downturn. The pain a recession would impose on Americans and the economy might be a fair trade, they believe, for imposing their vision of an economy less dependent on taxpayer money and more robust in domestic manufacturing.
Treasury Secretary Scott Bessent said the economy has an addiction that needs kicking.
“The market and the economy have just become hooked,” Bessent told CNBC this month. “We’ve become addicted to this government spending, and there’s going to be a detox period.”
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He’s not alone in anticipating people might suffer from the withdrawal, even if there’s not a full-on recession.
Trump referred during a Fox News interview this month to a possible “transition period,” although he has declined to predict a recession.
Commerce Secretary Howard Lutnick told CBS News a recession would be “worth it” to enact Trump’s policies, although he said he doesn’t think one is coming.
If there is a recession, which is not something anyone should be hoping for, the Trump administration’s acknowledgment that it might be necessary or worthwhile will mean that they own it.
Three recessions in 25 years
Each recent recession is associated with a particular crisis.
Pandemic Recession in 2020: It’s kind of surprising that the recession associated with Covid-19 was relatively short, although it was extremely severe. It was mitigated by massive amounts of government spending.
But this recession coincided with Trump’s election loss.
Great Recession from 2007 to 2009: Sparked by the housing bubble and the subprime mortgage crisis, among other things, the Great Recession saw a protracted spike in the unemployment rate. This recession is associated with the beginning of the Obama era.
