President Donald Trump’s economic priority shouldn’t be preventing a recession.
Stock prices are always a bit of a roller coaster. Over the last month, it’s mostly been a downhill ride. In mid-February, the S&P 500 hit 6,144. It’s now dipped below 5,525. That’s around a 10% drop, which means the market is in correction territory. This has people talking about the dreaded “r-word.”
“Stocks Plunge as Recession Talk Gets Louder,” a recent New York Times headline read.
Fox News host Maria Bartiromo asked Trump if he expected a recession this year.
“I hate to predict things like that,” Mr. Trump responded. “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 think it should be great for us.”
That’s a different tone than he had on the campaign trail. Trump told voters that he’d deliver “the best jobs, the biggest paychecks, and the brightest economic future the world has ever seen.”
What’s going on?
Start with this: Most Americans don’t judge the economy based on the stock market — and rightly so. From Election Day in 2020 to Election Day last November, the S&P 500 increased by more than 70%.
Yet the public rightly believed that former President Joe Biden oversaw a terrible economy. A 2024 ABC News exit poll found 45% of voters said they were worse off under the Biden administration. That was a higher number than in 2008 during the Great Recession.
Biden’s reckless spending and prolonged COVID restrictions drove inflation sky-high. It wasn’t just the high cost of gas and groceries that hurt Americans. For many new buyers, homeownership went from the American Dream to a Neverland fantasy.
Next, there is often a trade-off between short-term and long-term economic growth. Consumer spending drives much of the American economy. Firing federal workers and cutting government spending will reduce that, hurting the economy right now. But as those workers find jobs in the private sector, they’ll start producing more stuff, driving long-term economic growth.
Finally, the Trump administration isn’t trying to blindly boost GDP. That measure includes all economic activity, including what illegal immigrants generate. Trump and Vice President J.D. Vance want to make things more affordable for Americans.
For instance, by deporting illegal aliens and securing the border, Trump may hurt aggregate economic growth. But look at how it helps Americans.
“If you allow 20 million people to compete with American citizens for the cost of homes, you are going to have a large and, frankly, completely preventable spike in the demand for housing,” Vance said in a recent speech.
He’s right. Mass deportations and closing the border will reduce housing prices by lowering demand. Shrinking the pool of low-skilled workers will also increase wages for Americans in that group.
Both moves may hurt GDP. So-called experts may even declare that there’s a recession. But deporting illegals will improve the personal finances of many Americans. So will Trump’s moves to deregulate the energy industry, although rolling back regulations can take years.
The focus on Americans is why Trump says he’s pushing tariffs. He wants companies to return to the U.S. and to extract non-economic concessions from countries like Mexico and Canada. If he can use the threat of tariffs to reduce the flow of fentanyl, it’d be a major achievement. But tariffs raise prices. Playing tariff chicken with Canada may hurt both sides dearly and undermine his other economic efforts.
Trump’s economic success doesn’t hinge on the stock market. Voters want him to enact policies that lead to lower prices and better job opportunities — for Americans.
