Trump Declines to Rule Out US Recession in 2025, Calls Economic Transition “Very Big”

Washington: US President Donald Trump has refused to rule out the possibility of a recession in 2025, stating that the country is undergoing a significant economic transition. In an interview aired on Sunday, he was asked directly about the likelihood of an economic downturn this year but remained non-committal.

"I hate to predict things like that," Trump said in a conversation with Fox News. "There is a period of transition because what we're doing is very big—we're bringing wealth back to America. It takes a little time."

Despite Trump’s measured response, his administration officials have offered conflicting views. Commerce Secretary Howard Lutnick dismissed concerns over an impending recession, telling NBC’s Meet the Press:

"Absolutely not."

Market Volatility and Consumer Concerns

Trump’s trade policies, particularly his fluctuating stance on tariffs against countries like Canada, Mexico, and China, have led to uncertainty in financial markets. The stock market recently experienced its worst weekly performance since the 2024 election, while consumer confidence indicators have declined.

With inflation still a major concern for American households, analysts suggest that the potential impact of tariffs on goods prices is weighing on consumer sentiment. Additionally, widespread layoffs in government agencies—reportedly part of cost-cutting measures led by billionaire advisor Elon Musk—have heightened concerns over economic stability.

Mixed Economic Indicators

Some economic metrics signal potential trouble. The Atlanta Federal Reserve’s real GDP growth forecast currently predicts a 2.4% contraction in the first quarter of 2025, marking the weakest performance since the COVID-19 pandemic.

The uncertainty surrounding Trump’s tariff strategy has further complicated economic forecasts. The administration has shifted the timeline and scope of new trade duties, leaving businesses and investors uncertain about the long-term effects.

When asked whether tariffs would be a short-term policy or a lasting feature of Trump’s economic plan, Chief Economic Advisor Kevin Hassett said it depends on how targeted countries respond.

"If they fail to respond positively, the result could be a 'new equilibrium' of continuing tariffs," Hassett explained on ABC News.

Administration Maintains Optimism

Despite warning of potential turbulence, the Trump administration insists that its economic policies will lead to long-term growth. In his recent State of the Union address, Trump downplayed concerns, telling Americans:

"Expect a little disturbance as tariffs take hold, but we're okay with that. It won't be much."

Treasury Secretary Scott Bessent also described the current phase as a “detox period” while the government works to reduce spending.

Economists Remain Cautious

While administration officials paint a positive outlook, financial analysts remain wary. Goldman Sachs recently increased its probability of a US recession within the next 12 months from 15% to 20%, citing uncertainties in economic policy. Similarly, Morgan Stanley revised its growth expectations downward, anticipating a slower-than-expected year.

A recession is typically defined as two consecutive quarters of negative GDP growth. The US last faced a recession in early 2020 due to the COVID-19 pandemic, which led to widespread job losses and economic hardship.

With mixed signals from economic data, the next few months will be crucial in determining whether the US economy can navigate Trump’s economic transition without slipping into a downturn.