As the US economy faces growing concerns over a potential recession, President Donald Trump is set to meet with around 100 CEOs of the country’s largest businesses today in a Business Roundtable meeting in Washington, D.C. The gathering comes on the heels of a significant downturn in the market value of several major companies, fueled by worries about an economic downturn and soaring inflation, which have eroded consumer and investor confidence.
The Dow Jones index plummeted nearly 900 points yesterday, while the CBOE Volatility Index (VIX), a key measure of investor anxiety in the US stock market, surged over 14%. This Perfect storm of economic uncertainty has analysts warning that the US is increasingly at risk of entering a recession this year, partly due to the unpredictable nature of Trump’s trade policies.
The specter of a “Trumpcession” – a recession triggered by Trump’s policies – is becoming more real, with even the President himself acknowledging the possibility of an economic downturn in an interview with Fox News. Trump cautioned that businesses and households must be prepared for the challenges posed by the transitioning US economy and the rising inflation trend.
In light of these developments, several leading analysts have downgraded their forecasts for the US economy, citing the damaging impact of Trump’s trade wars. Goldman Sachs, for instance, has raised its estimate of the likelihood of a recession to 20%, up from 15%, citing the adverse effects of Trump’s tax policies and rising inflation on employment and economic growth.
Morgan Stanley has also revised its projection for US GDP growth this year, slashing it to 1.5% from 1.9%, as the consequences of Trump’s trade and immigration policies are deemed more severe than initially thought. Meanwhile, the Federal Reserve Bank of Atlanta’s GDPNow model suggests that the US economy may have contracted by as much as 2.4% in the first quarter of 2023, a stark reversal from its previous forecast of 2.3% growth.
These ominous signs have sparked intense debate among economists and policymakers, with many calling for a reassessment of the administration’s economic strategy to mitigate the risks of a recession. As the meeting between Trump and the business leaders gets underway, all eyes will be on the President’s response to the mounting economic challenges and his plans to steer the US economy back on track.