Is Trump leading us into a recession?

Summary

Post Reports Podcast Summary: "Is Trump Leading Us into a Recession?"

Published on March 10, 2025 by The Washington Post

In the March 10th episode of Post Reports, hosted by Colby Ikowicz and featuring economic correspondent Abba Batrai, the discussion centers on the economic trajectory under President Donald Trump's administration. The episode delves into whether Trump's policies are steering the United States toward a recession, examining factors such as tariffs, consumer behavior, job markets, and stock market responses.

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Personal Impact: Marcie Brown's Story

The episode opens with the personal narrative of Marcie Brown from Baton Rouge, Louisiana, illustrating the tangible effects of rising living costs on everyday families.

• Marcie Brown shares her family's adjustments: "We usually buy our eggs in five dozen cartons… I paid $18 for three months ago, I paid $30 for this month." (00:51)

• She highlights broader price increases: "It's now cheaper for me to buy shrimp than hamburger because the price of beef is up. Her coffee is almost double the price it was last year." (01:07)

Marcie expresses concern over proposed tariffs: "Look at how much produce comes into our country from Mexico… you just made it harder." (01:26) Her unease reflects a common sentiment among voters who feel economically strained under Trump's policies.

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Economic Shifts Under Trump's Administration

Abba Batrai provides an analysis of the evolving economic landscape since Trump took office, noting the transition from a strong economy to emerging signs of weakness.

• Batrai states, "Trump came into office at a time when the economy was extremely strong. The picture has changed quite a bit, though, in the last few weeks." (03:12)

• She discusses the impact of tariffs: "Americans are thinking twice about their decisions… businesses are holding off on hiring and investments." (03:12)

The conversation underscores the initial economic strength transitioning into uncertainty due to policy changes, particularly tariffs affecting both consumers and businesses.

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Tariffs and Their Ripple Effects

The administration's tariff policies are a focal point, with Batrai explaining their broad implications:

• "It's a very broad measure, but about 70% of GDP comes from consumer spending… if somebody decides not to buy, that counts against GDP." (10:50)

• She elaborates on business uncertainty: "Uncertainty is never good for business… companies are trying to figure out how much more they're going to pay on what items." (05:36)

Batrai highlights how fluctuating tariffs create a "guessing game" for businesses, leading to potential price increases for consumers and stifled investment and expansion.

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Consumer Behavior and Economic Anxiety

The episode explores how consumers are reacting to economic pressures:

• Batrai notes, "Consumers are very tired. They already feel very stretched thin… there's a lot of fatigue." (06:34)

• Eric Swick, a 39-year-old chemist, shares his proactive measures: "I bought some canned meat, canned fruit, 25-pound bags of rice, flour, sugar, oats, and beans." (08:09)

These behavioral changes mirror those from the early days of the pandemic, indicating a reversion to precautionary spending and stockpiling amid economic uncertainty.

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GDP Concerns and Potential Recession Indicators

A significant portion of the discussion centers on Gross Domestic Product (GDP) and its implications:

• Batrai explains, "GDP is the biggest measure of the economy… when GDP grows, that's generally considered a growing economy. When GDP shrinks, that's an economy that's also shrinking." (10:00)

• She underscores the multifaceted causes of potential GDP decline: "It's a very broad measure, but about 70% of GDP comes from consumer spending… business investments… government spending." (10:50)

The possibility of a shrinking GDP raises alarms about a looming recession, a departure from nearly three years of consistent growth.

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Job Market Trends and Federal Workforce Cuts

The latest job numbers provide a mixed picture:

• Batrai reports, "Employers added about 151,000 jobs in February… unemployment at 4.1% is still relatively low." (15:32)

• However, she cautions, "The federal government cut 10,000 jobs… and we're still waiting to see how this tricks through to other parts of the economy." (16:19)

While job growth remains solid, the long-term effects of federal workforce reductions and potential private sector layoffs remain uncertain.

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Stock Market Reactions and Investor Sentiment

The stock market's response to Trump's policies has been notably volatile:

• Batrai observes, "The stock market has been on a tear, but recently we've started to see it start tumbling. Investors are very worried." (18:23)

• She connects market downturns to policy instability: "People are just unsure of what's going to happen… tariffs could go into effect one day and maybe be rescinded the next." (19:18)

This volatility reflects investor unease over policy unpredictability and its potential impact on economic stability.

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Political Ramifications and Future Policy Directions

The potential for a recession poses significant political challenges:

• Batrai speculates on policy reversals: "It's possible… the stock market sell-off is one of the reasons the administration has decided to pause tariffs or sort of roll back certain tariffs." (19:18)

• President Trump's stance remains adamant: "This is just a little disturbance… it's going to make the economy much better." (20:58)

Voter patience appears limited, with many expressing a desire for tangible economic relief beyond initial promises.

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Conclusion: Uncertain Economic Horizon

The episode concludes on a note of uncertainty, highlighting the delicate balance between policy implementation and economic stability. While Trump's administration aims to overhaul economic structures with the intent of long-term gains, the immediate effects—rising prices, consumer fatigue, and market instability—suggest a precarious path ahead.

Marcie Brown optimistically states, "We're bringing wealth back to America… but it takes a little time." (20:58), encapsulating the divided sentiments among the populace.

As the administration navigates these tumultuous economic waters, the coming months will be critical in determining whether the strategies employed will foster growth or precipitate a recession.

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Notable Quotes:

• Marcie Brown (00:51): "I paid $18 for three months ago, I paid $30 for this month."

• Abba Batrai (03:12): "People are thinking twice about their decisions… businesses are holding off on hiring and investments."

• Eric Swick (08:09): "I bought some canned meat… anything that I thought was gonna potentially go up in price."

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This comprehensive analysis in Post Reports offers listeners a nuanced understanding of the current economic challenges under President Trump's administration, blending personal narratives with expert insights to paint a vivid picture of America's financial landscape.

Transcript

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[Colby Ikowicz]

Marcie Brown lives in Baton Rouge, Louisiana. She and her family have had to make a lot of changes to their lifestyle in the past couple months. They canceled streaming services, her husband has picked up extra shifts at work, and their daughters decide to live at home rather than live on her college campus. They've had to make all of these changes because of how expensive it's become to live.

[Marcie Brown]

We usually buy our eggs in five dozen cartons, if that makes any sense. The flat's a five dozen, our box is a five dozen. And what I was paying $18 for three months ago, I paid $30 for this month.

[Colby Ikowicz]

Marcy hasn't just been noticing the price of eggs going up, it's other things, too. It's now cheaper for her to buy shrimp than hamburger because the price of beef is up. Her coffee is almost double the price it was last year. And now that President Trump is proposing tariffs on Mexico and Canada, she's worried that it'll just get harder for her family.

[Marcie Brown]

Look at how much produce comes into our country from Mexico. I mean, there's produce you can't even get American grown anymore. And you sit there and you say, oh, it's a tax on the country that gets passed on to the consumer. You just made it harder for the.

[Narrator]

Little person to be able to afford something.

[Colby Ikowicz]

Marcy didn't vote for anyone for president. She didn't like either candidate. But now, just months into Trump's presidency, she's worried that his policies are making her life worse.

[Abba Batrai]

So it's still very early in President Trump's second term, but we're already starting to see changes ripple through the economy. We saw new tariffs go into effect last week. Some of those were pulled back, some of them weren't. There's a lot of uncertainty out there.

[Colby Ikowicz]

That's my colleague Abba Batrai. She reports on the economy for the Post.

[Abba Batrai]

And at the same time, Elon Musk's Doge Service has been laying off federal workers, cutting off funding Just, you know, shuttering entire agencies. And that's having real ripple effects as well. Over the weekend, President Trump declined to rule out the fear that we might fall into a recession soon. He's been saying that there's going to be a little bit of disturbance in the economy as he overhauls things and that Americans are just going to have to wait out the pain for a little while.

[Colby Ikowicz]

From the newsroom of the Washington Post, this is Post Reports. I'm Colby IKOWICZ. It's Monday, March 10th. Today, the economic impact of Donald Trump's presidency so far. So, abba, just broadly speaking, what's been happening to the economy since Trump took office in January?

[Abba Batrai]

Well, I'll preface this by saying that Trump came into office at a time when the economy was extremely strong. The picture has changed quite a bit, though, in the last few weeks. We're starting to see signs of weakness as businesses and households start to worry about uncertainty, especially over tariffs and what that means for prices. We're seeing consumers maybe say, hey, you know, maybe I shouldn't buy a car just yet. Maybe I should wait and see what happens, or maybe I should hold off on buying, you know, moving to a new house. Whatever the case may be, people are thinking twice about their decisions, and that's also happening at the business level. So businesses are holding off on hiring and investments until they have a better sense of where things are headed. We're also starting to see more economists worry about a slowdown in the economy. Some of them are thinking that gdp, which is a measure of the economy, might shrink at the beginning of this year. And that's a real departure from almost three years of very steady growth.

[Colby Ikowicz]

And I remember for the Biden administration, it was so frustrating for them that the economy was showing all these strong indications, but Americans voters weren't feeling it. And that was something that President Trump really focused on in his election campaign. He made promises to bring down the cost of groceries and to lower inflation. So how is President Trump's administration doing on those things?

[Abba Batrai]

So. That's exactly right. I mean, discontent over inflation and the economy is perhaps the biggest reason Trump won the presidency. I mean, Americans voted on that issue. And we heard him say over and over in his campaign that he was going to start bringing prices down on day one. That hasn't quite happened. If anything, a lot of people are expecting prices to go up as these tariffs take hold, and that's starting with groceries, which is a real pain point for a lot of people. Egg prices, as Marcy mentioned in the open have been rising. But there are other things like produce and dairy and, you know, everything else that people buy that are also going to be affected. And so those are real ramifications on a weekly basis for many families.

[Colby Ikowicz]

Abba, I wonder how is the business community reacting to this? Because it does seem like the president has proposed all these tariffs and then he's pulled them back a little bit, and it's creating a lot of instability in the market. So is that affecting, you know, kind of CEOs and big business?

[Abba Batrai]

Absolutely. I mean, uncertainty is never good for business. And we have just maximum uncertainty right now. You know, last week alone, we saw all of these new tariffs go into effect one day. The next day, auto tariffs were put on hold. The day after that, even more tariffs were put on hold. But it's not exactly sure which products are affected and which aren't. And so it's just a real guessing game for companies that are trying to figure out how much more they're going to have to pay on what items. So we've been hearing major, major retailers like Walmart, Target, Best Buy come out and say, well, if prices go up, we're going to have to pass that on to consumers. And that's sending a really worrisome sign across the economy.

[Colby Ikowicz]

Yeah, and consumers were already feeling the strain of high prices. So, you know, when you've talked to consumers, when you've been reporting on this story, what are they telling you about what it's going to mean to them in their lives to see prices potentially go up even higher?

[Abba Batrai]

Yeah, consumers are very tired. They already feel very stretched thin. They feel like they've sort of traded out everything that they could. And I think there's just a lot of fatigue at this point. At the same time, there's so much other uncertainty out there that I'm hearing more people who are worried that they or someone in their family might lose their jobs. You know, that even if they end up getting furloughed or just losing a couple of projects, that's going to really cut into their household income. And so they're having to manage all of that as well at the same time that they're worried about higher prices.

[Colby Ikowicz]

And we heard from Marcy at the top talking about behavioral changes. How are consumers talking about how they're going to have to change their lifestyles, change their behaviors because of these higher prices, because of the threats of job losses?

[Abba Batrai]

I've heard a lot of people who are preemptively pulling back, maybe canceling their streaming services or, you know, holding off on vacation, buying more in bulk. I've talked to some families that have stopped buying fresh fruits and vegetables altogether and are just moving to canned because it's cheaper. You know, it really feels like it did in the early days of the pandemic. There is all of this uncertainty out there. It's kind of a scary moment. We don't know what's next. Things might get better, they might get worse, but we also might be dealing with shortages and higher prices. One of the people I spoke to was Eric swick, who is 39. He's a chemist in the Chicago area, and he's really worried that prices are going to go up again. When he saw the news of new, new tariffs going into effect last week, he immediately texted his wife and said, we need to go to Costco.

[Eric Swick]

I bought some canned meat, canned fruit, 25 pound bags of rice, flour, sugar, oats and beans. Anything that I thought was gonna potentially go up in price, but also things that would last.

[Abba Batrai]

Then he's just playing it safe. He's cooking at home more. He's cutting back in other ways and just waiting things out.

[Eric Swick]

And maybe, maybe it's some kind of PTSD that we all have where we'd rather anticipate it being worse, you know, and then being surprised that it isn't as bad, you know, prepare for the worst. And then, okay, I still have all this. It's like, I didn't waste my money. I still have, you know, this food that's not spoiling.

[Abba Batrai]

And so I think it's just kind of feels like a waiting game for a lot of families right now as they try to figure out what's next.

[Colby Ikowicz]

It's interesting, Abba, that you brought up the pandemic, because it occurred to me that we are in the week that everything kind of started to shut down five years ago. And so if people are kind of turning back to some of these pandemic level behaviors and practices, I mean, does that surprise you that people would take such dramatic steps?

[Abba Batrai]

Not at all. I mean, I think we are in a very similar moment. And that memory of the pandemic is still very fresh in people's minds. They remember what it was like to go to the store and, you know, be worried about being able to get everything that they needed, not being able to afford things or not being able to find things on the shelves. And I think that's probably adding to some of their trepidation in this moment.

[Colby Ikowicz]

Right, because it was only five years ago that we all lived through that.

[Abba Batrai]

Exactly.

[Colby Ikowicz]

Abba One of the things you mentioned is that economists are worried that GDP could shrink. Can you remind us what GDP means and what it means that it could fall?

[Abba Batrai]

GDP is the biggest measure of the economy. It sort of sums up all the goods and services that are produced in this country. So if you are a shoemaker and you make and sell shoes, that counts. If you are a consumer who's buying, you know, a new TV or going to restaurants, going to the movies, all of that spending counts. It gives us a measure of how healthy the economy is. When GDP grows, that's generally considered a growing economy. And when GDP shrinks, that's an economy that's also shrinking. And that's what people are worried about right now, that the economy might actually be shrinking. And that can be a precursor to a recession.

[Colby Ikowicz]

And so. So what causes GDP to go down? Is it the cuts to government spending that Doge is doing? Is it the tariffs? Is it kind of all of the above?

[Abba Batrai]

It's all of the above. It's a very broad measure, but about 70% of GDP comes from consumer spending. So it's, you know, the everyday things that you and I are buying and spending our money on. If somebody get a little spooked and says, wait a minute, I'm not going to get my morning coffee or I'm not going to buy that car this week, that counts against gdp. Similarly, what businesses spend and invest in is also included in GDP as well as the government, and that includes federal spending and state and local spending, which actually makes up the bulk of government spending that goes into the economy.

[Colby Ikowicz]

And isn't it true that Trump's administration have hinted that maybe they would change the way that government spending relates to gdp?

[Abba Batrai]

Yeah. We have heard some Trump officials muse that maybe it's time to take government spending out of gdp, that they don't want it to be calculated in the final figure. But it's really unclear what that would mean. GDP is already reported in different components. You can already sort of factor out the government spending part of it and see that it really doesn't make much of a difference in the trajectory of economic growth. So it's just a different way of counting things. Not quite clear what might happen there.

[Colby Ikowicz]

After the break, we'll discuss the most recent jobs report and why the stock market is responding so poorly to tariffs. We'll be right back.

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[Colby Ikowicz]

Okay, Abba, let's dive in on these recent job numbers that came out on Friday. What did we learn from them?

[Abba Batrai]

We've learned that hiring has slowed a little bit this year. Employers added about 151,000 jobs in February, which was less than they did a year earlier and also less than people were forecasting. So there's been a little bit of a slowdown, but this is still very solid growth. It's not, you know, nothing's falling off a cliff. We're not seeing major job losses. Unemployment at 4.1% is still relatively low, and so there's not a lot of cause for alarm in the numbers yet. But the big caveat is that the numbers aren't necessarily showing us a full picture of what's happening out there. It's going to take a couple more months for all of that to show up.

[Colby Ikowicz]

Yeah, I was going to ask, are these numbers able to reflect yet the cuts to the public sector, or is that going to show up in later job reports?

[Abba Batrai]

So we're seeing a little bit of that. In February, we saw that the federal government cut 10,000 jobs. That's a small portion of what I think people are expecting longer term. And we're still waiting to see how this trickles through to other parts of the economy like contractors or consultants or nonprofits. We know that a lot of those folks who work in those industries have been furloughed or laid off as well. And it's not necessarily clear if that's showing up yet in the numbers.

[Colby Ikowicz]

How do the proposals around tariffs impact jobs? You talked about people maybe having to lay people off in the private sector due to the tariffs. I guess we could also maybe see that be factored in in months to come.

[Abba Batrai]

Yeah, that's absolutely right. Last week I talked to a number of businesses that rely on goods from Mexico and Canada, and they were. They were all worried. They're worried that they're going to be spending more on these goods. They're not sure how much of that they can pass on to their customers. And so it might mean that they're having to pay a bigger portion of that and they have to cut back in other ways, which could mean layoffs. It's still just a very fluid moment, and it's unclear. And that in itself can be a big deal in terms of, you know, business decisions. Deciding whether to hire someone, deciding whether to expand, deciding whether to set up a new office. I mean, I think all of those decisions could potentially be put on hold, and that has real implications for hiring. And I'll also note that the strong job market has been like a real pillar of the economy in the last few years. It's been driving a lot of the growth that we're seeing. And even if people are feeling crummy about grocery prices, in most cases they still have a job. And so that counts for a lot. They're getting paid. And if that starts to falter, then we could start seeing bigger signs of trouble for the economy.

[Colby Ikowicz]

And how has the stock market responded to all of this, to the tariff proposals, to the federal workforce cuts? I mean, my memory is that the stock market was doing pretty well at the end of the Biden administration.

[Abba Batrai]

Yeah, the stock market has been on a tear, but recently we've started to see it start tumbling. Investors are very worried. They don't like uncertainty. They don't like volatility. And the last few weeks have been one big bucket of uncertainty. We have a government shutdown that might happen at the end of this week. I mean, there's just so many looming questions out there. And you can tell as the stock market keeps flashing red that investors are just not very thrilled about the state of affairs.

[Colby Ikowicz]

It occurs to me, Abba, that President Trump has always been very responsive to the stock market. He talks about the stock market, he talks about the Dow and where it is. And he really ran on, like we said earlier, strengthening the economy. Do you think that the some of these negative indicators are why President Trump pulled back or at least delayed the tariffs on Mexico and Canada over the weekend?

[Abba Batrai]

You know, it might be. It's hard to tell. There are obviously ongoing negotiations. I've heard some economists muse that, yes, maybe the stock market sell off is one of the reasons the administration has decided to pause tariffs or sort of roll back certain tariffs. Tariffs, it's unclear, but what's very telling is that even when President Trump decided to pause some tariffs last week, the stock market didn't sort of change course. It stayed pretty downbeat. And I think that's because people are just unsure of what's going to happen. And the thought that tariffs could go into effect one day and maybe be rescinded the next is not very comforting either.

[Colby Ikowicz]

Yeah. And if these job numbers, they continue to fall off, if the stock market tanks, if it really looks like we're heading for a recession, these are going to obviously be politically Very unpopular for the president and the Republicans that support him. Do you think that we could see him reverse course on some of these policies if things do continue to get worse?

[Abba Batrai]

It's possible. So far, the administration has just kind of doubled down on their message. We heard President Trump over the weekend again say that this is just a little disturbance. This is a period of turbulence that people are going to have to roll with because he's making some major changes. He is cutting public spending, he's cutting the federal workforce. And people might feel some pain right now in terms of higher prices or job losses, but in the end, it's going to make the economy much better.

[Donald Trump]

Are you expecting a recession this year?

[Marcie Brown]

I hate to predict things like that. There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That's a big thing. And there are always periods of. It takes a little time. It takes a little time. But I don't. I think it should be great for us. I mean, I think it should be.

[Abba Batrai]

So what that looks like, what the timeline is is unclear, but I think that's what the administration and a lot of Trump voters that I talked to are holding out for. They're hoping for lower taxes. They're hoping a number of different changes that might materialize in the coming months.

[Colby Ikowicz]

Yeah, I was wondering if the voters that you talk to are prepared to roll with it. Are they prepared to wait and feel some of that pain, hoping that on the other side of this is a stronger economy?

[Abba Batrai]

The answers have honestly been all over the place. Some people said, yes, they are willing to roll with it, but only for a certain amount of time. There's only so many more months of higher prices they can endure. And they want to see some real action. They want to see their taxes go down. They want to see some sort of relief somewhere. And so I think, you know, they have a little bit of patience now, but I'm not sure how long it'll last.

[Colby Ikowicz]

Abba, thank you so much.

[Abba Batrai]

Thank you.

[Colby Ikowicz]

Abba Batrai is an economic correspondent for the Post. That's it for Post Reports. Thanks for listening. Today's show was produced by Sabi Robinson with help from Rennie Svirnoski. It was mixed by Sam Baer and edited by Maggie Penman. I'm Cole Bjkowicz. We'll be back tomorrow with more stories from the Washington Post.

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[Abba Batrai]

Right?

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