'Trumpcession' Talk Surges as US Economy Could Be Rapidly Shrinking

Fears of a potential recession under President Donald Trump, dubbed a “Trumpcession,” are mounting as consumer confidence dips and economic concerns grow amid steep tariffs and persistent inflation.

Why It Matters

Trump promised to bring down prices “on day one,” so any economic downturn as a result of his policies could have major political ramifications for the president, as well as financial consequences for Americans.

Job losses, stock market declines, and lower consumer confidence could hurt businesses and increase federal deficits.

Historically, recessions have harmed incumbent presidents, as seen in 1992 and 2008. A recession could weaken global trade and reshape public perception of Trump’s leadership, giving Democrats a shot at victory in the 2026 midterms and 2028 presidential race.

What to Know

On Monday, the Atlanta Federal Reserve’s GDPNow model predicted that the U.S. economy would shrink by 2.8 percent in the first quarter of 2025, reinforcing fears that the country may be on the brink of a recession.

“The economy appears to be gagging on the uncertainty created by the haphazard economic policymaking happening in D.C.,” Mark Zandi, chief economist at Moody’s Analytics, said on X, formerly Twitter, on Sunday.

While some economists warn of slowing growth, others, including Goldman Sachs CEO David Solomon, believe the likelihood of a full-blown recession remains minimal.

The term “Trumpcession” has gained traction as market volatility, inflation concerns, and aggressive tariff policies raise alarms about economic stability. The Conference Board’s consumer confidence index recently fell by seven points to 98.3, with the expectations index dropping below the warning threshold of 80 that usually signals a recession ahead.

The decline in confidence spans multiple demographics, but is particularly pronounced among middle-income earners, as rising inflation expectations and concerns about future employment weigh heavily on sentiment. Inflation projections have risen sharply, with year-ahead forecasts estimating a 6.2 percent increase in prices, up from the current 5.2 percent.

Despite growing concerns, major financial institutions remain cautiously optimistic. Solomon stated that the probability of a U.S. recession remains “very small” despite global trade uncertainty.

Speaking at the Australian Financial Review Business Summit, Solomon pointed out that Trump’s approach to trade has contributed to market instability, but emphasized that economic fundamentals remain strong, according to Financial Express.

While economists at Capital Economics predict a GDP contraction in the first quarter, in a note last week, the firm’s chief North America economist Paul Ashworth wrote, “We expect GDP to rebound by 4.5 percent annualized” in the second quarter. “The upshot is that a ‘Trumpcession’ should be avoided and there is no need for the Fed to cut interest rates.”

Meanwhile, the White House has announced plans to implement additional tariffs, including a 20-percent surcharge on Chinese imports. Analysts fear this could exacerbate inflation and hinder economic growth.

What People Are Saying

Daryl Fairweather, chief economist at Redfin, told Newsweek: “Businesses that rely on imported goods will suffer and could even shutter. People will lose their jobs as a result. The price of imported everyday items like household goods, appliances, cars and electronics will go up. Retaliatory tariffs will hurt American businesses that sell goods abroad.”

Mark Zandi, chief economist at Moody’s Analytics said on X: “Tariff wars, DOGE cuts to jobs and government programs and agencies, and deportations are sowing confusion, which puts a pall on investment, hiring and spending (…) Lawmakers need to get it together soon, or the economy will go from gagging to choking.”

Andrew Foran of TD Economics said: “The economic impact of a sustained 25-percent tariff on Canada and Mexico would be severe, with full tit-for-tat retaliation likely to push Canada and Mexico into a recession and the U.S. to a point of stagnant growth.”

Gerard Lyons, chief economic strategist at Netwealth told Newsweek: “If higher tariffs trigger a rerouting in trade, then U.S. price levels may not rise. For instance, higher taxes on Chinese goods previously led to an increase in imports from Vietnam, not hit by tariffs.”

What Happens Next

The Federal Reserve remains cautious, holding interest rates steady while monitoring inflation and market reactions to Trump’s tariff policies. Market analysts predict that if inflation continues to rise, the Fed may need to raise rates rather than cut them, despite earlier expectations of rate reductions in 2025.

As economic uncertainty continues, the impact of Trump’s policies on consumer confidence and financial markets will remain a critical issue in the months ahead. Whether the “Trumpcession” becomes a reality or remains a politically charged buzzword will depend on key economic indicators in the coming quarters.