In Washington, there is growing concern that President Donald Trump’s use of tariffs, combined with government layoffs and spending freezes, might be inflicting more damage on the U.S. economy than improving it. Despite a robust labor market with a 4.1% unemployment rate and an addition of 151,000 jobs in February, signals of economic discomfort are emerging. The latest employment report shows a significant increase of 460,000 in individuals working part-time out of economic necessity.
Notably, the leisure and hospitality sectors, which thrive when consumers have disposable income, lost 16,000 jobs. Additionally, the federal government decreased its workforce by 10,000 employees, possibly reflecting the tensions indicated by the stock market and consumer sentiment toward future economic conditions.
The economic policy uncertainty index has surged by 41% since January, reaching 334.5—a level historically associated with recession periods. Stanford University economist Nicholas Bloom, a contributor to the index’s development, voices concerns that this could herald what might be known as the “Trump recession.” He points to the ongoing policy volatility and a potential trade war as possible triggers for the first U.S. recession in five years.
President Trump seems largely unfazed by the uncertainty he stirs, asserting that any economic discomfort from tariffs is simply a “disruption” that will eventually guide more factories back to the U.S. and stimulate growth. If successful, Trump might be remembered as an innovative leader who defied skeptics. However, if his tariffs fail, everyday Americans could face consequences like job losses, reduced wages, heightened inflation, and diminished national pride.
In an upcoming “Sunday Morning Futures” interview on Fox News, Trump was asked to clarify his tariff strategy amidst the generated uncertainty. The president responded by attributing a recent 6% stock market decline over two weeks to “big globalists,” while suggesting tariffs might continue to rise, although he expressed uncertainty about predictability.
According to the White House, the jobs report demonstrates the administration’s strategy is effective, particularly with 10,000 new manufacturing jobs. Significantly, 8,900 of these jobs were in the auto sector, partially recovering the industry’s earlier job losses. Conversely, the White House attributes the decline in leisure and hospitality jobs to seasonal flu and the economic burden of President Joe Biden’s term.
Kevin Hassett, head of the White House National Economic Council, praised the job report, attributing the rise in factory jobs to companies “on-shoring” work in anticipation of future tariffs. Hassett anticipates many similar reports as hiring strengthens in industrial sectors.
The stock market’s decline has cast doubt on whether tariffs will indeed produce the jobs promised by Trump. John Silvia, CEO of Dynamic Economic Strategy, suggests that the tariff approach could result in higher inflation, slower growth, and a weaker dollar, comparing the situation to a slow-motion horror film.
Trump has recently triggered a trade conflict with Canada, Mexico, and China, although some import taxes have been postponed due to potential threats to U.S. auto jobs and Mexican efforts to curb drug smuggling. New tariffs on European imports are set for April 2, just as Trump announces potential trade measures against South Korea, India, and Brazil during an address to Congress.
Silvia argues for more targeted tariffs, proposing lower rates and better-supported research to back policy measures effectively. The Federal Reserve’s recent beige book report, notable for its 47 mentions of uncertainty up from 17 earlier in the year, reflects widespread confusion and concern across businesses.
Boston College economist Brian Bethune describes this period as a perfect storm for businesses, making planning exceedingly difficult.
Despite market unease, Treasury Secretary Scott Bessent stated optimism on CNBC, pointing to positive trends in tackling inflation. He cited decreased crude oil prices and specific interest rates since Trump’s inauguration, though acknowledged the rise in government debt interest rates since September.
Bessent pointed to America’s heavy reliance on government deficit spending and Trump’s plan to bolster private sector growth. He noted the need for a “detox period” from government spending habits, indicating a change in economic strategy with the Department of Government Efficiency (DOGE), led by tech entrepreneur Elon Musk, aiming for cost savings.
Although the DOGE’s efforts in reducing national debt are minimal amidst increasing Social Security and Medicare costs, their initiatives have begun downsizing the federal workforce. An estimated 75,000 employees accepted deferred resignation offers, with further layoffs anticipated in the future.
President Trump expressed confidence in future labor market success, countering concerns about government layoffs by emphasizing the switch to high-paying manufacturing roles and rationalizing workforce reductions.
