President Donald Trump is not only dragging down the U.S. economy but also the global economy. This is the conclusion of a new report on global economic outlook published Monday by the Organization for Economic Cooperation and Development (OECD).
Meanwhile, Trump and his associates claim that the American economy is extraordinary, writes Washington Post.
Economy in decline, Trump administration denies: "Fake news"
Capital markets have recently entered correction territory. Moreover, only 18% of Americans view the economy as "excellent" or "good," according to an NBC News poll, while other consumer confidence indicators have dropped significantly.
Expectations for inflation are rising at an unprecedented pace, and the number of those fearing job loss has reached levels typical of recession periods, as noted by Apollo's chief economist, Torsten Sløk.
Against this backdrop, American consumers expect an increase in unemployment and inflation over the next 12 months.
However, according to Treasury Secretary Scott Bessent, all of this is just "fake news."
"Our administration and the American people are focused on the real economy, not on deceptive polls or so-called 'vibes,'" he wrote on social media. "After four disastrous years for families and workers, President Trump has the experience and vision needed to deliver the strongest economy and most prosperous capital markets in history."
All causes lead to Trump
Consumer confidence is plummeting across all demographic categories, from Democrats to Republicans. More alarmingly, experienced investors and international analysts are also sounding warning signals.
On Monday, the OECD published new economic forecasts for 2025, and the outlook is considerably bleaker than in the previous report issued in December.
Forecasts for U.S. and global economic growth have been revised downward, while inflation forecasts have been raised.
Many factors influence these analyses, but the OECD has attributed two major reasons for the negative outlook:
- increasing uncertainty, and
- escalating trade wars - both caused by Trump's policies.
According to the report, the U.S. GDP will slow from the robust pace of 2.8% in 2024 to just 2.2% in 2025, a decline from the December forecasts.
Similarly, the global economic growth forecast has been reduced by 0.2 percentage points.
Trump's trade policies amplify economic risks
OECD estimates that the 25% tariffs imposed by the U.S. on Mexico and Canada will take effect on April 2, and a new global tariff of 10%, as threatened by Trump, could worsen inflation and slow the global economy.
It's not just the OECD sounding the alarm. Last week, Wall Street forecasts based on Blue Chip Economic Indicators indicate weaker economic growth and higher prices than anticipated.
"The shifting winds of policy changes, most notably tariff hikes on the fly, the associated threat of a global trade war, a possible army of government employees facing unemployment, and potentially large cuts in federal government spending have shaken both consumer and business sentiment and raised the specter of what could be called 'mild stagflation'," the Blue Chip report cited by Washington Post states.
Even Trump's allies admit that the short-term negative impact is inevitable.
Commerce Secretary Howard Lutnick argues that the president's economic policy "will be worth it," even if it causes a recession. Ultimately, markets and consumers will decide if this strategy is sustainable.
D.D.