The U.S. economy is almost certainly headed for a recession later this year. And President Donald Trump’s administration may have engineered it on purpose.
Since the S&P 500 Index was created in 1957, no president has ever inherited a bull market and completely flipped it into a loss of at least 5 percent in the first 100 days of their administration—until Trump’s second term. On January 17, 2025, just before Trump was sworn in again, the S&P 500 closed just shy of 6,000 points. On April 4, 2025, it closed at just 5,074 points.
In fact, the S&P 500 dropped by such a sharp amount at the end of the first week of April that an emergency measure aimed at preventing stock market crashes nearly kicked in. As Bloomberg reported, the New York Stock Exchange’s “trading curbs”—which automatically shut down all trading for 15 minutes—were nearly activated after the S&P 500 dipped by 6 percent in just one day of trading. Had the index experienced a drop of 7 percent or more, it would have briefly halted all trading. According to Bloomberg, the index bled out $5.4 trillion in just two days. Former Treasury Secretary Larry Summers pointed out that this was the fourth-largest 48-hour shift in markets in U.S. history, just behind the 1987 “Black Monday” stock market crash, the 2008 meltdown, and the COVID-19 pandemic.
Additionally, the Chicago Board of Options Exchange’s Volatility Index (VIX) recently saw its highest jump since the COVID-19 pandemic shut down the global economy in March of 2020. The VIX spikes when there is a high level of volatility in financial markets. It jumped significantly during the 2008 financial crisis, then experienced another sharp increase at the onset of the pandemic. Bloomberg reported that the April 5 uptick in the VIX came just after Trump announced his double-digit tariffs on virtually every country in the world.
Following the massive stock sell-off in the wake of his tariffs, JPMorgan Chase revised its economic forecast to predict that the U.S. economy would be in a recession by the end of 2025—specifically as a result of Trump’s trade policy. The Atlanta Fed also predicted that GDP would contract in the first quarter of the year by anywhere from 0.8 percent to 2.8 percent. Generally, if GDP contracts for two consecutive quarters, the economy is considered to be in a recession.
And yet, Trump’s response to markets reeling was to post an all-caps screed to his Truth Social account telling investors that now was “a great time to get rich, richer than ever before!!!” He then left Washington for a Saudi-sponsored golf tournament at his Florida golf resort in which a foreign government funneled millions of dollars directly to one of his businesses.
The stupidity of Trump’s tariffs can’t be overstated
If someone wanted to purposefully drive the economy off of a cliff, imposing the kinds of tariffs Trump did would be a great way to go about it. The Smoot-Hawley Tariff Act of 1930 serves as a great lesson about how broad tariffs can lead to economic calamity.
As the Cato Institute explained in 2016, Smoot-Hawley made the Great Depression significantly worse. The tariffs impacted roughly 20,000 imported goods, increasing import duties from 13.5 percent to nearly 20 percent. While the bill’s authors intended for the legislation to protect American farmers and the domestic manufacturing sector, the economy was wiped out after countries imposed their own retaliatory tariffs. American imports fell by roughly two-thirds and exports fell off in a similar fashion.
If applied smartly and limited to very specific items, and if taking factors into account like currency manipulation, value-added taxes, subsidies, sanctions, and transportation costs, tariffs can serve as a way of protecting American workers and businesses and incentivizing companies to ramp up production at home. But Trump’s “Liberation Day” tariffs were neither smart nor specific.
When economist James Surowiecki analyzed the rates shown on the chart Trump unveiled during his tariff press conference, he found that the rates may have very well been the product of simply dividing the United States’ trade deficit with that country’s exports to the U.S., or 10 percent, whichever was greater. The administration often harps on the U.S. trade deficits with other countries, and one aide anonymously told reporters ahead of Trump’s speech that a trade deficit represents “the sum of all cheating.”
It’s important to note that a trade deficit by itself is not inherently a bad thing. All that means is we’re buying more products from another country than that country buys from us. As journalist Jamison Foster wrote on his Substack: “I have a trade deficit with the guy at the farmers’ market who sells me zucchini and onions. He sells me stuff but I don’t sell him anything: Trade deficit. But the guy is not ‘cheating’ me, he’s just selling me vegetables.”
Tech publication The Verge also learned that the tariff rates applied to every country around the world were almost certainly the result of putting a prompt into an AI asking it to come up with an “easy” way to put the U.S. “on an even playing field.” Verge reporters tested this theory on popular AI programs like ChatGPT, Grok, Gemini and Claude and found a “remarkable consistency” in how they all recommended dividing U.S. trade deficits by exports to the U.S.
This wouldn’t be the first time the Trump administration has been accused of using AI to write government policy: Appellate lawyer Raffi Melkonian suggested that Trump’s executive order renaming the Gulf of Mexico was “absolutely written by AI” given its unusual wording. And Slate journalist Mark Joseph Stern argued that the “poor, slipshod work” that went into Trump’s early executive orders was the result of AI-generated copy.
Trump made tariffs a mainstay of his 2024 campaign, and regardless of how they were devised, it’s impossible to argue that he caught Americans off guard. And Vice President Kamala Harris repeatedly warned that if Trump followed through with his tariff threat, it would amount to an additional “sales tax on the American people.” And during a recent public appearance, Harris jokingly told the crowd: “I’m not here to say I told you so.”
Regardless of how ill-conceived they were, the result may very well have been an economic climate most favorable for Trump and those in his Cabinet—even if it came at the expense of everyone else. It’s worth wondering if in fact Trump’s desired outcome from his tariff announcement was a recession. And if that’s the case, it’s important to point out that the billionaire class almost always comes out ahead in a recession while the working class suffers.
Recessions are bad for everyone except the super-rich
The last two recessions (the 2008 subprime loan crisis and the 2020 pandemic crash) should serve as clear examples of how market instability almost always leads to significant transfers of wealth from the working class to the billionaire class. While the contributors to each recession were different, the end result of each one was the same.
When the 2008 financial crisis hit, the banks effectively held the global economy at gunpoint: Either the U.S. government bails out the too-big-to-fail banks or they go down and take us all with them. The George W. Bush administration launched the Troubled Asset Relief Program (TARP) in which the banks offloaded hundreds of billions of dollars worth of toxic assets onto the government. All told, the global financial system benefited from roughly $29 trillion in bailout money, according to the Levy Institute of Economics at Bard College.
By 2011, roughly half of all Americans’ mortgages were underwater (in which a homeowner owes more on their mortgage than their home is worth). And a year later, investment firm Blackstone—through its company Invitation Homes—became a major player in the housing market by purchasing tens of thousands of single-family homes in major metropolitan areas for cheap. Blackstone sold Invitation Homes in 2019 for roughly $7 billion, more than doubling its original investment. By 2016, economist Emmanuel Saez found that the bottom 99 percent of American income earners had only recovered about 60 percent of what they had lost from the Great Recession, while the recovery for the top 1 percent was more than twice that of the rest of America.
2020 played out in a similar fashion. When the COVID-19 pandemic shut down the global economy, the Federal Reserve agreed to prop up the banks with massive infusions of money (also known as Quantitative Easing). Other central banks, like the Bank of England, did the same. The U.S. government also lavished wealthy investors and business owners with hundreds of billions of dollars in tax breaks and handouts that went well beyond compensating losses.
Americans, in the meantime, lost their jobs and were told to stay home indefinitely. Those who couldn’t work remotely had to make do with a $1,200 stimulus check and rely on safety net programs like a temporary eviction moratorium that the Supreme Court ripped away roughly a year later. While the pandemic drove roughly 160 million people around the globe into poverty, the world’s 10 richest men more than doubled their own personal net worth.
Similar to the aftermath of 2008, Invitation Homes once again went on a home-buying spree after the pandemic. Slate reported that the firm expanded its presence to 16 major U.S. cities and focused on buying the kind of smaller houses that serve as starter homes for middle-class families looking to break into home ownership. In some Atlanta, Georgia ZIP codes, for example, Invitation bought 90 percent of homes for sale in the early 2010s.
Slate’s Elena Botella reported that Invitation was able to get preferential interest rates of roughly 1.4 percent, which was far lower than even the lower pandemic-era interest rates offered to other normal home buyers. This allowed Invitation to pad their offers by anywhere from $5,000 to $20,000 more than other prospective buyers, naturally giving them a major advantage over working-class families in a bidding war.
Now in 2025, it appears that another recession may be in the cards sooner than we think. Trump’s Truth Social post signaling to investors that now was the time to “get rich” may have been bluster, but it may also have been a signal to the billionaire class that fire-sale prices for assets like real estate are just around the corner. As Public Citizen reported, 16 of Trump’s most senior-level advisors and Cabinet officials are all members of the billionaire class. Even if average Americans get soaked, people like Tesla and SpaceX CEO Elon Musk, Education Secretary Linda McMahon, Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, Interior Secretary Doug Burgum and Trump himself will all come out fine. In fact, they’ll almost certainly come out way ahead compared to where they were before.
Working-class Americans should view a purposefully engineered recession as blatant aggression by the ownership class. If Trump indeed tanks your 401(k) to make himself and his friends even richer, the opposition party should make that the centerpiece of their attack heading into next year’s election. And American voters should dole out an appropriate punishment for every member of Congress who let it happen.
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