I'm an Economist: Here's Why I Believe Trump's Economic Moves May Lead to a Recession
Learn More: Trump Isn't Ruling Out a Recession This Year — What Could That Mean for Your Wallet?
Try This: The New Retirement Problem Boomers Are Facing
GOBankingRates spoke to economists about the risks associated with Trump's moves that may lead to recession.
Early Warning Signs
Economists say the clearest signs of recession often show up in overlooked places. These lagging indicators suggest that while prices may remain high, the real economy is already slowing down beneath the surface.
One thing to watch is freight volumes — less cargo coming in and high prices on the shelf could indicate front-loaded inflation with more negative economic impacts to come.
Another early warning sign is an uptick in business credit usage. Smaller businesses that run out of liquidity to cover their expenses sometimes turn to credit just to cover their operating costs. If they can't catch up, this lack of liquidity can lead to job cuts.
Be Aware: 4 Mistakes the Upper Middle Class Are Making With Their Money in the Trump Economy
Escalating Tariffs Strain Stability
President Trump's aggressive stance on tariffs led to a 0.3% contraction in the U.S. economy during the first quarter of 2025, marking the first decline in three years.
'The tariffs are upending the global trading system and current manufacturing chains that have generated tremendous prosperity for the U.S. and helped promote widespread affordability until the recent inflation surge,' said Wayne Winegarden, an economist at the Pacific Research Institute. 'The interruption to this trading system will diminish the long-term growth potential of the U.S.'
Erratic Decisions Erode Confidence
Trump's unpredictable shifts in economic policy and sudden reversals on imposing sweeping tariffs have created an uncertain climate for businesses and investors.
'While there are issues and imbalances in the global system that need to be addressed, the problem with the current administration's policies is an inherent inconsistency among the different objectives they seemingly want to achieve,' said Davide Accomazzo, a finance instructor at Pepperdine University's Graziadio Business School.
Accomazzo continued, 'Trying to lower inflation is inconsistent with high tariffs, and a lower dollar is inconsistent with the need to stabilize the bond market and guide interest rates lower.'
Escalating Global Tensions
Trump's imposition of tariffs up to 145% on Chinese imports has triggered a retaliatory response from Beijing, including 125% tariffs on U.S. goods and restrictions on critical mineral exports.
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USA Today
a few seconds ago
- USA Today
US stock futures little changed as investors await more earnings reports
U.S. stock futures are little changed as investors await more earnings reports. The broad S&P 500 and tech-heavy Nasdaq scored record highs to start the week amid solid earnings reports from Domino's Pizza, Cleveland-Cliffs and Verizon. Of the more than 60 S&P 500 companies that have reported, more than 85% of those topping analysts' estimates, according to FactSet data. Analysts on average expected S&P 500 companies to report a 6.7% increase in earnings for the second quarter, with big technology companies driving much of that gain, according to LSEG I/B/E/S. Philip Morris International, Coca-Cola and Lockheed Martin are among those slated to report before the market opens. However, the main events are midweek when Tesla and Alphabet report results. Investors will be keen to dissect the earnings reports for signs of how President Donald Trump's tariffs have hit the economy and corporate spending. At 6 a.m. ET, futures linked to the blue-chip Dow were at 0%, while S&P 500 futures slipped -0.11% and Nasdaq futures dropped -0.27%. Federal Reserve Chairman Jerome Powell is also scheduled to speak at a conference in Washington DC as the stock market opens. Corporate news Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@ and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday.
The Hill
a few seconds ago
- The Hill
5 things to know as the GENIUS Act becomes law
President Trump signed the GENIUS Act into law on Friday, enacting the first major cryptocurrency legislation. The bill, which sets up a regulatory framework for payment stablecoins, reached Trump's desk after a tumultuous week in the House, in which competing GOP factions revolted over a trio of crypto bills. The chaos brought the House floor to a standstill and resulted in the longest vote on record in the chamber. Republican leaders struck a deal late Wednesday night to move forward with consideration of the bills, unfreezing the floor and allowing votes to proceed on Thursday. The House ultimately voted 308-122 to pass the GENIUS Act, with 102 Democrats joining most Republicans to support the legislation. Here's are five things to know about the newly minted stablecoin law: 'Seal of approval' for crypto industry The signing of the GENIUS Act marks a key milestone for the industry, as the 'first step of the U.S. government really regulating cryptocurrency,' said Rob Nolan, a partner at Duane Morris and a member of the law firm's digital assets and blockchain group. As the first major digital assets bill to clear Congress and receive the president's signature, it imbues the industry with new legitimacy. 'It's a big deal because when you have a law … it essentially gives a Good Housekeeping seal of approval to the industry,' Ian Katz, managing partner at Capital Alpha, told The Hill. 'You now have Congress and the president of the United States signing off on the legitimacy of this industry. 'You can interpret the legislation as encouraging the activity,' Katz said. 'To a lot of people, this is the sort of thing you need to really get an industry to take off.' The passage of the bill marks a sharp reversal of the industry's fortunes in Washington, which just last year still looked somewhat bleak. The industry had struggled to regain its footing after the shocking collapse of crypto exchange FTX in 2022 and the subsequent fraud charges filed against its founder, Sam Bankman-Fried. He was later found guilty and sentenced to 25 years in prison. Under the Biden administration, the industry also contended with former Securities and Exchange Commission (SEC) Chair Gary Gensler, who brought numerous enforcement actions against crypto firms. They accused Gensler of attempting to regulate via enforcement, rather than providing clear rules. By contrast, Trump has embraced the industry in his second term, naming David Sacks as artificial intelligence (AI) and crypto czar, inviting crypto leaders to the White House and signing an executive order to create a strategic bitcoin reserve and digital asset stockpile. Broader crypto framework still in the works While the industry secured a key victory with the GENIUS Act, it represents just one part of the regulatory puzzle for digital assets. 'This is just the first little bite at the apple because it really is a small portion of cryptocurrency assets,' Nolan added. Stablecoins are just one type of cryptocurrency. They are tied to another asset, like the U.S. dollar, to maintain a more stable price. Congress has yet to pass legislation creating a broader crypto framework. The key issue at hand is how to split up oversight between the SEC and the Commodity Futures Trading Commission. The House last week passed its version of crypto market structure legislation, known as the Digital Asset Market Clarity Act. The Senate, which has moved at a slower pace, is separately preparing to release its own discussion draft. Despite previously aiming to pass both stablecoin and market structure legislation before Congress leaves for its August recess, the White House and GOP leadership are now aiming to wrap up the second key crypto bill by the end of September. Financial regulators take on new responsibilities Under the GENIUS Act, several financial regulators are poised to take on new responsibilities regulating stablecoins. The Office of the Comptroller of the Currency (OCC) is set to regulate stand-alone stablecoin issuers, while it and the Federal Reserve, Federal Deposit Insurance Corporation and National Credit Union Administration will regulate institutions they already oversee that issue stablecoins. Stablecoin issuers can seemingly expedite the approval process if they can become chartered banks with the OCC, which has already prompted several stablecoin issuers, including Circle and Ripple, to apply for bank licenses. Banking industry pushes back on crypto charters The banking industry isn't entirely content with the direction in which things are headed and is making its concerns known, particularly on the push by some stablecoin issuers to seek bank charters. In a letter to the OCC on Thursday, several major banking associations questioned whether the stablecoins issuers would be performing the activities of national trust banks and called for the agency to hold off on taking up their applications for now. 'Given these substantial concerns, and the policy, legal and commercial implications that chartering the applicants would have for the banking system, the associations urge the OCC to postpone consideration of the applications,' the banking groups wrote. Traditional players weigh stablecoin adoption Even as some voice concerns, many traditional players in the financial services space are considering or already moving into stablecoins. Bank of America CEO Brian Moynihan said last week that his bank is working to launch a stablecoin, while Citigroup CEO Jane Fraser said her bank was considering such a move, Reuters reported. JPMorgan Chase announced last month it was launching a stablecoin-like deposit token called JPMD, and CEO Jamie Dimon said last week that his company would be involved in stablecoins as well, according to CNBC. Katz said he expects traditional players to 'not let stand-alone stablecoin issuers just grab that potential market.' 'Some of them are probably not even totally convinced that this market is going to be nearly as big as what is being projected, but they can't take any chances,' he said. 'They have to plan defensively and make sure they're not left out in the cold if stablecoins really take off in a big way in the coming years.'
The Hill
a few seconds ago
- The Hill
The government was once a steady partner for nonprofits. That's changing
Dawn Price signs rent checks worth about $160,000 every month for 79 people that her nonprofit helps house in Laguna Beach, California. Usually, she logs into an online portal to withdraw enough from an account funded by a grant from the federal housing agency. But in February, she couldn't. Access had been temporarily cut off for many housing organizations as part of the Trump administration's cuts and funding freezes. 'That was just a sea change for us for those dollars to be so immediately at risk,' said Price, the executive director of Friendship Shelter, which started in 1987 as a community organization. Access was eventually restored but the episode took a toll. 'Government moves slowly usually, and I think what was so disorienting early on was government was moving really fast,' she said. In the early days of his second term, President Donald Trump froze, cut or threatened to cut a huge range of social services programs from public safety to early childhood education to food assistance and services for refugee resettlement. Staffing cuts to federal agencies have also contributed to delays and uncertainty around future grant funds. Altogether, his policies are poised to upend decades of partnerships the federal government has built with nonprofits to help people in their communities. This vast and interconnected set of programs funded by taxpayers has been significantly dismantled in just months, nonprofit leaders, researchers and funders say. And even deeper, permanent cuts are still possible. That uncertainty is also taking a toll on their staff and communities, the leaders said. In response to questions about the cuts to grant funding, White House spokesperson Kush Desai said, 'Instead of government largesse that's often riddled with corruption, waste, fraud, and abuse, the Trump administration is focused on unleashing America's economic resurgence to fuel Americans' individual generosity.' He pointed to a new deduction for charitable giving included in the recently passed tax and spending law that he said encourages Americans' 'innate altruism.' But experts say private donations will not be enough to meet the needs. In 2021, $267 billion was granted to nonprofits from all levels of government, according to an analysis by the Urban Institute published in February. While the data includes tax-exempt organizations like local food pantries as well as universities and nonprofit hospitals, it underestimates the total funding that nonprofits receive from the government. It includes grants, but not contracts for services nor reimbursements from programs like Medicare. It also excludes the smallest nonprofits, which file a different, abbreviated tax form. However, the figure does give a sense of the scale of the historic — and, until now, solid — relationship between the public sector and nonprofits over the last 50 years. Now, this system is at risk and leaders like Price say the cost of undoing it will be 'catastrophic.' Government funding to nonprofits reaches far and wide The Urban Institute's analysis shows more than half of nonprofits in every state received government grants in 2021. In the vast majority of the country, the typical nonprofit would run a deficit without government funding. Only in two Congressional districts — one including parts of Orange County, California, and another in the suburbs west of Atlanta — would a typical nonprofit not be in the red if they lost all of their public grant funding, the analysis found. But in Orange County, famous for its stunning beaches, mansions and extraordinary wealth, funders, nonprofits and researchers said that finding surprised them. In part, that's because of major economic inequalities in the county and its high cost of living. Taryn Palumbo, executive director of Orange County Grantmakers, said nonprofits are not as optimistic about their resiliency. 'They are seeing their budgets getting slashed by 50% or 40%,' she said. 'Or they're having to look to restructure programs that they are running or how they're serving or the number of people that they're serving.' Last year, the local Samueli Foundation commissioned a study of nonprofit needs in part because they were significantly increasing their grantmaking from $18.8 million in 2022 to an estimated $125 million in 2025. They found local nonprofits reported problems maintaining staff, a deep lack of investment in their operations and a dearth of flexible reserve funds. The foundation responded by opening applications for both unrestricted grants and to support investments in buildings or land. Against this $10 million in potential awards, they received 1,242 applications for more than $250 million, said Lindsey Spindle, the foundation's president. 'It tells a really stark picture of how unbelievably deep and broad the need is,' Spindle said. 'There is not a single part of the nonprofit sector that has not responded to these funds. Every topic you can think of: poverty, animal welfare, arts and culture, civil rights, domestic abuse… They're telling us loud and clear that they are struggling to stay alive.' Charitable organizations have held a special role in the U.S. One of the founding stories of the United States is the importance of the voluntary sector, of neighbors helping neighbors and of individuals solving social problems. While other liberal democracies built strong welfare states, the U.S. has preferred to look to the charitable sector to provide a substantial part of social services. Since the 1960s, the federal government has largely funded those social services by giving money to nonprofits, universities, hospitals and companies. Several new policies converged at that time to create this system, including the expansion of the federal income tax during World War II and the codification of tax-exempt charitable organizations in 1954. Then, the Kennedy and Johnson administrations started to fund nonprofits directly with federal money as part of urban renewal and Great Society programs. 'It was a key approach of midcentury liberalism of addressing issues of poverty, sort of making a reference to civil rights and racial inequality, but not growing the size of government,' said Claire Dunning, an assistant professor of public policy at the University of Maryland, College Park. Conservatives also tended to support working through local, private, nonprofit organizations, though for different reasons than liberals, she said. With various expansions and cuts during different presidencies, the federal government has continued to fund nonprofits at significant levels, essentially hiding the government in plain sight, Dunning said. The size and importance of the nonprofit apparatus became suddenly visible in January when the Trump administration sought to freeze federal grants and loans. Dunning said the speed, hostility and scale of the proposed cuts broke with the long legacy of bipartisan support for nonprofits. 'People had no idea that the public health information or services they are receiving, their Meals on Wheels program, their afterschool tutoring program, the local park cleanup were actually enabled by public government dollars,' she said. A coalition of nonprofits challenged the freeze in court in a case that is ongoing, but in the six months since, the administration has cut, paused or discontinued a vast array of programs and grants. The impacts of some of those policy changes have been felt immediately, but many will not hit the ground until current grant funding runs out, which could be in months or years depending on the programs. Private donations can't replace scale of government support Friendship Shelter in Laguna Beach has an annual budget of about $15 million, $11.5 million of which comes from government sources. Price said the government funding is 'braided' in complex ways to house and support 330 people. They've already lost a rental reimbursement grant from the U.S. Department of Housing and Urban Development. But the Samueli Foundation stepped in to backfill those lost funds for three years. That kind of support is extremely unusual, she said. 'We don't know of any large-scale private philanthropy response to keeping people housed because it's a forever commitment,' Price said. 'That person is in housing and is going to need the subsidy for the rest of their lives. These are seriously disabled people with multiple issues that they're facing that they need help with.' She also believes that even in a wealthy place like Orange County, private donors are not prepared to give five, six or eight times as much as they do currently. Donors already subsidize their government grants, which she said pay for 69% of the actual program costs. 'We are providing this service to our government at a loss, at a business loss, and then making up that loss with these Medicaid dollars and also the private fundraising,' she said. She said her organization has discussed having to put people out of housing back on to the streets if the government funding is cut further. 'That would be, I think, a signal to me that something is deeply, deeply wrong with how we're looking at these issues,' said Price, adding, 'If I was placing a bet, I would bet that we have enough good still in government to prevent that.' ___
