The US economy is heading for recession

Happy Sunday. I’m back to the US economy this week.

This week, the probability of a recession in America rose. It is not the main job of this year’s analysts. Thus, on Sunday’s day, it is free for free, this is why the world’s largest economy will fall into 2025.

The dispute has two components. First of all, even the inauguration ceremony of US President Donald Trump, the US economy was weaker than many. I have outlined why it is Opinion Color: In August and this newsletter’s earlier edition,Debunking American exclusiveism”

Second, Trushononomics has removed the prospect of importing stagflationary forces and the risks of the financial market. It’s the focus of today’s newsletter.

Let’s start with consumers. Reminder: High costs are offered on debt and expenses, such as food, housing and healthcare. Serious offenses on credit card balances have hit 13-year height last year, sharp interest rates, which are increasing more and more households.

The White House’s agenda will add an insult on the injuries by keeping taxes on top. Mexico and Canada’s proposed responsibilities (now pause) plus already in China will increase the effective US tariff rate since 1943 Budget Laboratory in YaleA number of it takes into account the high price levels can spend the households up to $ 2,000.

This is only tasting. Further tariffs are expected. And although the president has a knife to push back deadlines, the impact on the mood is already strict.

Trust has fallen. Consumer inflation and the expectations of unemployment have been shaken. It’s a terrible trijecta. Households are still trying to get a stomach 20 percent, climbing a priceless epidemic. Especially since real consumption fell for the first time in January, about two years. The behavior of the wary cost is now more likely.

Next: Business. A wider capacity of urban production and restless consumers is a wider capacity of policy and restless consumers. Import responsibilities are determined by international sales and the action of response to the operation. But radical uncertainty also hinders business planning and adapting to business.

The result is already shown in business activities. In February, Goldman Sachs analyst index pointed out in February for sale, new orders, exports and employment. Production construction costs. Which increased greatly with the act of reduction in inflation and the acts of chips slowed The status of schemes It is incomprehensible under the new administration.

Corporate prospects also darkened. BCA Research Capex intensions fell into a compression area. Historically, it has signed a signal.

According to the latest, small business rental programs also dilute Nfib researchIs a set of Challenger Tracker: Planned labor cuts jumped 245 percent in February.

Reminder: Before entering the Trump, many overestimate the extent to which the American “Strong” labor market has been received. The government, health and social assistance take into account two thirds of new jobs created from the beginning of 2023 (and half of the 151,000 non-farm salary added in February). Immigration also started the growth of employment from the epidemic.

Then comes the goals of the new administration. In the private sector, the Eternal ISI assesses the efforts to reduce the expenses of the public sector of Elon Mushk this year. In an extreme scenario, which could be achieved over than 1.4 million.

A planned failure on the fixed immigrants, which make up at least 5% of the labor force, will increase labor losses.

Next, this administration has pushed the risks of the stock exchange higher.

Before the inside of Trump, the S & P 500 was already at the level of multiplication and concentration levels of a variety of 10 companies.

But the markets also rose to what extent the president would go on the agenda of his policy, such as the last correction on the US stock exchange, the pre-election levels.

Over the past year, analysts have offered the S & P 500 stretch assessments too much, as they reflected higher earnings and promise of artificial intelligence. But the optimism around earns will now be poured. Sales and investment plans have been clouded through uncertainty, in AI and otherwise. Many US companies earn significant money abroad, Trump in nations can oppose trade wars. In other words, stock prices have a place in the fall.

If the president really “started” on his plans, his tolerance can be quite high for the weakness of the next stock exchange. However, the threat of the market has real economic consequences. The equity reserves of households as the share of their total assets are in records.

Finally, wider financial risks seem more likely (even if their probability is still low) and can tighten in financial conditions.

Matt King, Satori Insights, points to possible causes that can reverse the status of America’s “Safe Shelter” (during which flights are associated with a lesser dollar and lower treasury income). “A combination of concerns about the placement of tax collection, independence and more extreme proposals and more extreme proposals. Some of a number of a number as part of the MAR-LAGO can simply be tricked, “he said.

Administration programs with tariff income (particularly the beginning of the bus stop) and, the so-called government’s efficiency department is very suspicious. US loan costs are already high. Fiscal weakness increases yield. The US Treasury Requirement faces other possible headscarves such as the upcoming German bound issue. Now it is easier to imagine that the United States falls into higher yield and more debt forecasts.

Then there are risks that Trump’s plans are thin. The institutionalization of crypto, haffazard financial prevention and potential dollar manipulation.

Markets don’t know how Price uncertaintyHow, like when Trump was the last. The rapid reopening of political risks can run the dynamics of sales in bonds and share markets. This can then cause liquidity problems.

How will feed feeding will also be clear? Given the underestimated signs of the cooling economy last year, interest rates were extremely limited to the second Trump.

Are now in the instance holding rates. The prospect of weakening growth is an increase in expectations for cuts. But by rising in inflation, Fed can rely on a cautious side and high levels of high levels. In that case, the prospect of growth will weaken. Indeed, the growth of inflation is difficult to assess the risk of error.

The UPSHOT? Many analysts have been cutting their GDP forecasts for this quarter, which are due to business storage imports, expecting tariffs. The most expects to be disguised in the second quarter (although Trump’s stop tariffs will continue to promote reserves). Even then, slowly activities and mood, growing financial risks and is already less than a dynamic economy, it is difficult to see what can increase the mood and promote the growth.

Perhaps Trump’s growth tax cuts and prevention measures. First, they will still start. Second, they will be reimbursed with anti-crisis elements of his policy agenda. Tax reductions will promote profits, but the ability to do something with those obtained will be limited to uncertainty and higher import costs. The red ribbon can support investments, but the monitoring of various new tariff regimes and carved drills are a huge extra regulatory load.

It is possible to fall into an impediment. But it will require Trump significantly withdraw his import plans and restrain his shot-hip style. How likely is that?

Facilities send thoughts to me Freelchung@ft.com or in x @ Teapperikh90A number

Food for mind

Here is a reminder why a free dinner is valuable for Sunday’s reporting analysis. Last calls have been made European stock markets, German economy aeration of Shirt seem to be hit by the sign.