Trump admin on path of ‘de-growth for US economy’

ISLAMABAD: The Trump administration has started down a path of determined de-growth for the US economy, according several reports in foreign media.

There is still time to avoid a deeply damaging period of economic distress — but it needs to happen soon. The western media and independent economists have observed that President Donald Trump’s impact on the economy so far has been less a matter of turning the ship’s rudder and more similar to a ship firing torpedoes at itself.

The reversal in economic data since the Trump Administration took over has been historically rapid —and bad. The stock market is in near free fall. Interest rates are also falling, but for an undesirable reason: investors are assuming the Federal Reserve will need to swoop in soon to try to aggressively rescue a falling economy with future interest rate cuts. They have opined that the unemployment insurance claims for federal workers have noticeably jumped even before the full force of the Department of Government Efficiency (DOGE) layoffs have been recorded.

The economic data is reported retrospectively. But “nowcasts,” short-term predictions which allow us to estimate the current and future states of the economy, indicate that growth in gross domestic product for the first quarter of 2025 is collapsing, with some prominent projections showing outright economic contraction.

They have reminded that a recession is often defined as two consecutive quarters of economic contraction. Plus, measures of economic policy uncertainty are rivaling, or exceeding, what prevailed during the worst phases of the Covid-19 pandemic.

None of these negative economic consequences were necessary, or even easy to make happen. It required a series of significant economic policy mistakes to make this scenario come to pass. They have indicated that much of the commentary around this stunning reversal of economic fortune focuses on Trump’s tariff proposals.

It is true that Trump’s trade policy has involved chaotic shifts which threaten to destabilize the US economy. But focusing only on his tariff policy misses other key policies that have been similarly damaging. Rather, the high-profile whipsaws on tariff policy have mostly made people realize that the misguided economic ideas championed during Trump’s presidential campaign really might come to pass.

“Take the potentially illegal actions of Elon Musk’s DOGE. While the precise impact of DOGE’s cuts to the federal workforce is hard to predict, the plan to destroy the capacity of the federal government by any means possible was stated plain as day during Trump’s campaign.”

The economists have said that the Trump Administration’s desire to enact mass deportations has yet to come to pass at scale. If it does, it is widely recognized that it would constitute a blow to the supply-side of the US economy, depriving large swathes of US business the labor force they rely on to produce goods and services.

Mass deportations would cause enormous price spikes in the food and construction sectors.

They are of the view that during Trump’s first term, the economy performed decently. Though some may say his economic success from this term was also largely inherited, GDP grew and unemployment remained low.

However, the economic success of Trump’s first term abruptly ended after three years because of a pandemic that rocked the global economy.”