The stock market rose to record heights after Donald Trump’s 2024 re-election. Wall Street reveled in Trump’s promises of even more tax cuts and defanged regulators, not to mention making the world safe for saying all those politically incorrect thoughts about DEI. What could go wrong?
Plenty, it turns out. Trump’s only been in office two months and the S&P 500 is lower than it was before Nov. 6 and in correction territory. The risk of a recession is rising, and confidence for consumers and small businesses is plummeting, even as fears of inflation are increasing. Multiple Fortune 500 companies report a softening in consumer spending. The dreaded word “stagflation” is getting tossed around.
The Trump administration is hardly offering reassurance.
No wonder so few people, it seems, want to plan a getaway: The Conference Board reports that under 40% of Americans are planning a vacation in the next six months. In the last 40 years, that number has only been lower during the Covid-19 pandemic and the Great Recession.
The Trump administration is hardly offering reassurance. Not only do the president and staffers like Treasury Secretary Scott Bessent refuse to rule out the possibility of a recession, they are even arguing that economic pain will result in a better future. The president called it “a period of transition.” Commerce Secretary Howard Lutnick insisted Trump’s tariff policies will be “worth it” even if they lead to a recession.
As one banker told the Financial Times, “With hindsight, we did not appreciate the nature of what the administration was going to be like.”
You don’t say.
Wall Street’s enthusiasm for Donald Trump was always a triumph of hope over experience and evidence. True, absence makes the heart grow fonder, but there were signs everywhere, long before Trump was elected, that he was serious about tariffs — which Wall Street, rationally or irrationally, abhors — and other policies that have both roiled the markets and sparked warning signs in the economy since his inauguration. And if nothing else, you would think the chaotic management of the Covid pandemic and violent end of his first term would give the masters of the financial universe pause.
It did not.
Even in the best of circumstances, Trump is a chaos monster. More than ever before, he’s embraced chaos as both an economic and governing strategy. That is, you shouldn’t need me to tell you, is a risky way to run an economy.
For example, there is a case to use tariffs in a way that is strategic, stable and reliable, and that would promote the long-term goal of strengthening the nation’s manufacturing capacity. Trump’s approach has none of these qualities. His goals include nonsense like attempting to annex Canada. He imposes them one day only to call them off the next. And even his choice of targets, according to Lutnick, depends not on any rational criteria but on which countries “make him unhappy.”
Financial markets and businesses crave stability and predictability; they react poorly to chaos and political favoritism.
The administration’s approach to slashing government is another issue. Trump has allowed Elon Musk’s minions at the so-called Department of Government Efficiency to fire tens of thousands of federal workers, cancel scores of federal contracts and even stiff businesses that have already performed work for the federal government. Many of these actions might well get reversed in the nation’s courts, but for now, universities and other impacted businesses are instituting hiring freezes and laying off employees. Others — like former Social Security Commissioner Martin O’Malley — fear that DOGE cuts to Social Security amid false claims of rampant fraud are risking a “total system collapse.” All this uncertainty and fear, in turn, is contributing to increasing consumer pessimism.
Then there is Trump’s open corruption and vengeance politics. He’s attacking multiple law firms that have played a role in his various legal woes. At the same time, he and his family are profiting from everything from cryptocurrency sales to Amazon’s $40 million deal to stream an “unprecedented, behind-the-scenes” documentary about Melania Trump. As I have pointed out in the past, the United States is a financial giant not just because it is a resource-rich country. We are — or were — considered a stable country as well, where the rule of law is enforced fairly and consistently. Financial markets and businesses crave stability and predictability; they react poorly to chaos and political favoritism. Just as people need some assurance that their job will be there for them tomorrow before they make a big purchase, the same is true for businesses. They can’t plan for the future if they don’t have a secure sense of what their underlying expenses and sales will be — something that is increasingly impossible in the Trump economy. “The problem for the markets is when they don’t know what to do,” said billionaire investor Marc Lasry last week. “An economy can’t survive like that.” Let me reiterate that uncertainty is bad for all of us, not just the financial markets. There’s a pervasive myth that Republicans are better for the economy than Democrats. Nothing could be further from the truth. Job growth is higher when a Democrat is in the White House. The S&P 500 performs better under Democratic presidents. Nine out of the last 10 recessions — including each of the last five — have begun with a Republican sitting in the Oval Office. But many who should know better don’t want to believe the evidence. It’s all personal. Even as inequality soared to near-record levels, many of the wealthiest Americans — from Wall Street to Silicon Valley and everywhere in between — have insisted they were the true victims, lashing out at the Biden administration and complaining about any regulation or possible tax increase. These supposed financial experts let their greed and pique blind them to the reality that always was and always will be Donald Trump.
Helaine R. Olen
Helaine R. Olen is the author of "Pound Foolish: Exposing the Dark Side of the Personal Finance Industry" and a co-author of "The Index Card: Why Personal Finance Doesn't Have to Be Complicated." She has been a columnist for The Washington Post and Slate, and her work has also appeared in numerous other publications, including The New York Times and The Atlantic. 
