The UCLA Anderson Forecast issued a “recession watch” on Tuesday, warning that President Trump’s plans to simultaneously impose stiff tariffs, deport immigrant workers and cut a million government jobs threaten the overall economy.
Economist Clement Bohr said the Anderson Forecast’s analysis of recent developments found “many measures of consumer and business sentiment have turned negative over the last month.” He said that historically recessions occur when there are “simultaneous contractions in multiple sectors of the economy.”
He cited manufacturing, construction, agriculture, health care, hospitality and finance as sectors that are all at risk now from one or more of Trump’s policies.
“The ad-hoc and fitful tariff policy paralyzes firms’ investment and hiring decisions,” said Bohr, while “the threat of deportations paralyzes economic activity in immigrant communities as both workers and consumers choose to stay home in fear of capture.”
Finally, actions by Elon Musk’s Department of Government Efficiency “will amount to the largest single layoff event in U.S. history,” impacting local businesses that serve those who are laid off.
Bohr added that the financial sector “with elevated asset valuations and newly introduced areas of risk, is primed to amplify any downturn.”
The economist said a recession is not a foregone conclusion but a policy choice by the Trump administration in seeking to “dramatically transform the U.S. economy in its first 100 days.”
“What’s unique about this recession watch is that, to a large degree, it primarily depends on incoming policy,” Bohr said. “A recession is thus entirely avoidable. If the policies outlined above are pared back or phased in more gradually, they are unlikely to trigger one.”
The Anderson Forecast is one of the most widely watched economic outlooks. It was the first major forecast to call the recession of 2001 and the first to declare the recession caused by the COVID-19 pandemic.
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