A powerful force is dominating the Trump economy: fear. About two-thirds (66%) of adults say they are pessimistic or afraid about the economy, according to new findings from a CNN/SSRS poll released Monday. Just 34% say they feel enthusiastic or optimistic. The overwhelming majority – 69% – consider an economic recession in the next year to be at least somewhat likely, including 32% who say it’s very likely. This sense of dread in the first 100 days of the second Trump presidency isn’t just a political problem for the White House. It’s also a psychological problem for an economy that requires consumer spending to stay afloat. This raises the risk of a recession becoming a self-fulfilling prophesy. Fear of a recession causes Americans to shop less and save more. Vacations aren’t booked. Cars aren’t purchased. Restaurants aren’t full. CEOs, worried about consumers hunkering down, do the same. They hire fewer and fire more. And that causes consumers to pull back even further, prompting even more layoffs. It can become a negative feedback loop that is hard to break. The economy and financial markets are a confidence game – one that has been shaken by President Donald Trump’s trade war and sweeping April 2 tariff announcement, attacks on Federal Reserve independence and chaotic policymaking. “April 2nd was a turning point. It’s been four weeks of chaos, and the chaos has been disruptive. We are beginning to pay the price for it,” said David Kotok, co-founder of investment management firm Cumberland Advisors. Consumer spending is the key It’s clear that consumer sentiment has been dropping. The CNN poll found that seven in 10 of those under the age of 45 express pessimism or fear about the economy. So do 76% of Americans of color. And it’s true that Democrats are more pessimistic than Republicans about the state of affairs. But the CNN poll found bipartisan economic concerns, with 39% of those who voted for Trump in 2024 saying a recession is very or somewhat likely in the next year. Still, it’s far too early to know if the turbulence in financial markets will short-circuit the economic expansion that began after the Covid-19 pandemic crash. It’s entirely possible that weak consumer confidence does not cause a drop in consumer spending. That’s exactly what happened in 2022, a time when many consumers and economists were similarly sounding the recession alarm – only to be proven wrong. The US economy has proven very resilient. It shook off multiple Covid variants, the supply chain mess, the inflation crisis and the regional bank failures of 2023. And so far this year, there isn’t much evidence that Americans have stopped spending. Retail sales jumped and car sales surged in March as consumers tried to beat the clock on tariffs. Restaurant reservations on OpenTable are higher than a year ago. And it’s possible that the massive rebound in US stocks after Trump delayed country-specific tariffs for 90 days could improve the mood on main street as it did on Wall Street. Bankruptcy fears for the toy industry and beyond Weak confidence among consumers could interrupt the business cycle. “A lot of businesses are getting nervous. They could pause spending or cut back on travel and hiring. And that’s what could make this a self-fulfilling prophesy,” David Kelly, chief global strategist at JPMorgan Asset Management, told CNN in a phone interview. Consider that 81% of small toy companies and 87% of mid-sized toy companies are delaying orders due to tariffs, according to an April survey by the Toy Association, a trade group. That same survey found that almost half of all small- and mid-sized toy makers say they will go out of business within weeks or months. “We are starting to see the first signs of the supply chain breakdown from tariffs. My expectation is that it will worsen,” said Kotok, who pointed to a surge of container ships sitting offshore and canceled sailings. ‘In this industry, that’s a recession’ BlackRock CEO Larry Fink recently said many business leaders fear the US economy is already in a recession, and JPMorgan’s Kelly said he is most concerned about how CEOs will respond to economic worries. Just last week, Southwest Airlines CEO Bob Jordan highlighted most severe drop in domestic leisure travel outside of the pandemic, telling Bloomberg News: “I don’t care if you call it a recession or not, in this industry, that’s a recession.” Kelly said it may be a “shallow” recession but “the odds still favor us slipping into recession unless we see a sharp about-face on tariffs.” Torsten Slok, chief economist at investment firm Apollo Global Management, goes a step further, saying there is a 90% chance of a “voluntary trade reset recession.” “Expect ships to sit offshore, orders to be canceled, and well-run generational retailers to file for bankruptcy,” Slok wrote earlier this month in a report. Policy whiplash Jared Bernstein, a top economist for President Joe Biden during the last recession scare in 2022, cautioned against assuming a recession is inevitable. “We’ve gone through years of bad vibes and good data. We have to be careful not to over-torque on this,” Bernstein told CNN in a phone interview. Still, Bernstein sees a roughly 50/50 chance of a US recession because of the stagflationary shock from tariffs, which are expected to simultaneously slow the economy and increase prices. The policy whiplash is also a problem. “Even if we believe (Trump) will dial back the trade war,” Bernstein said, “how confident can we be that he won’t dial back his dial-back the next day?”
Americans fear an imminent recession. That may be enough to put us in one
TruthLens AI Suggested Headline:
"Consumer Fear of Recession Raises Risks for U.S. Economy"
CNN
6.7
TruthLens AI Summary
A recent CNN/SSRS poll reveals that fear is significantly influencing the American economy, with approximately 66% of adults expressing pessimism regarding economic conditions. This sentiment could lead to a self-fulfilling prophecy of recession, as many Americans are hesitant to spend, fearing a downturn. The poll indicates that 69% of respondents believe a recession is at least somewhat likely within the next year, including 32% who consider it very likely. This pervasive anxiety is not just a political issue for the Trump administration; it poses a psychological challenge for an economy reliant on consumer spending. As people scale back on spending, evidenced by fewer vacations booked and reduced restaurant visits, businesses may react by hiring less and even laying off workers, creating a negative feedback loop that can be difficult to escape. The economic landscape, already shaken by trade wars and erratic policymaking, is particularly vulnerable at this juncture.
Despite the current wave of pessimism, there remains a possibility that consumer spending could remain robust, as seen in 2022 when fears of a recession did not materialize into decreased spending. Recent data shows that retail sales and car sales surged in March, suggesting that consumers are still willing to spend. However, concerns among business leaders are growing, particularly in sectors like the toy industry, where many companies are delaying orders due to tariffs, raising fears of bankruptcy. Industry executives, including those from JPMorgan and BlackRock, express that a recession may already be underway in certain sectors, particularly with a noted decline in domestic leisure travel. Economists caution against assuming a recession is inevitable, highlighting the need to balance fears with the reality of current economic data. The situation remains fluid, with a 50/50 chance of recession expected due to the impact of tariffs on both economic growth and inflation, leaving many uncertainties for the future.
TruthLens AI Analysis
The article examines the pervasive sense of fear regarding the economy among Americans, specifically during the early days of Donald Trump's second presidency. This sentiment of dread, highlighted by a CNN/SSRS poll, reflects a significant psychological barrier that could potentially precipitate an economic recession. The narrative suggests that consumer confidence is crucial for economic health, and the prevailing fear could lead to reduced spending, creating a self-fulfilling prophecy of recession.
Public Sentiment and Economic Impact
The findings from the CNN poll indicate that a substantial portion of the American public feels pessimistic about the economy, with two-thirds expressing fear or pessimism. This sentiment is particularly pronounced among younger individuals and people of color, revealing a demographic divide in economic outlook. Such widespread apprehension can directly affect consumer behavior, leading to decreased spending on essentials and luxury items alike, which are vital for economic stability. The article argues that this downturn in consumer spending can trigger a vicious cycle, resulting in layoffs and further economic contraction.
Political Context
The article highlights the political implications of this economic fear, suggesting it poses challenges for the Trump administration. The reference to Trump's trade policies and chaotic governance hints at how political decisions impact economic perceptions. The article implies that the administration’s handling of economic policies has contributed to the current climate of fear, which can be interpreted as a critique of Trump's leadership.
Manipulation and Perception
While the article provides factual polling data, it also appears to manipulate emotions by emphasizing the fear aspect. By framing the potential recession as a self-fulfilling prophecy, the article may inadvertently amplify public anxiety. The choice of words, such as "chaos" and "dread," can evoke a stronger emotional response, which may lead readers to adopt a more negative view of the economic situation.
Comparative Analysis
When compared to other economic reports, this article stands out by focusing heavily on consumer sentiment rather than purely on statistical economic indicators. This approach aligns with broader media trends that emphasize narratives of fear and uncertainty in economic discussions, which can shape public perception and behavior.
Community Response and Societal Implications
The article seems to resonate more with communities that are already economically vulnerable or politically aligned with Democratic views, as these groups may feel the effects of recession more acutely. The implications of the reported fear can extend to political mobilization, potentially influencing voter behavior and policy advocacy.
Market Reactions
Such news can have significant implications for stock markets and global financial systems. Investor sentiment is often swayed by public perception of economic stability, and fears of recession can lead to market volatility. Sectors heavily reliant on consumer spending, such as retail and hospitality, may be particularly affected by this atmosphere of fear.
Global Perspective
In the context of global power dynamics, this article highlights ongoing economic challenges within the U.S. that could affect its standing in international markets. The fears expressed may resonate with broader concerns about economic stability in other nations, especially amid global trade tensions.
Artificial Intelligence Considerations
It's possible that AI tools were used in crafting this article, particularly in analyzing polling data and shaping the narrative. AI models could influence the style and tone of the writing, steering it towards a more dramatic presentation of the facts to engage readers emotionally.
In conclusion, while the article presents valid data regarding consumer sentiment and its potential economic implications, it also employs language that could be deemed manipulative in creating a climate of fear. The combination of psychological insights and political critique positions the article as a significant commentary on the current economic landscape.