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 prophecy. 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 prophecy,” 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:
"Widespread Economic Fear Among Americans Raises Risk of Recession"
CNN
7.1
TruthLens AI Summary
A recent CNN/SSRS poll indicates a pervasive sense of fear regarding the economy among Americans, with about two-thirds of adults expressing pessimism. Only 34% of respondents reported feeling optimistic, while 69% believe a recession within the next year is at least somewhat likely. This climate of anxiety poses significant challenges not only for the White House but also for the economy itself, which relies heavily on consumer spending. As consumers hesitate to spend—opting instead to save—businesses may respond by reducing hiring and cutting jobs, creating a potentially damaging cycle of reduced economic activity. Experts caution that this fear could lead to a self-fulfilling prophecy, where the very apprehension about the economy triggers the recession that many fear. Notably, the concern is widespread, with 70% of individuals under 45 and 76% of Americans of color sharing this pessimistic outlook. Interestingly, even among Trump supporters, a significant portion acknowledges the likelihood of a recession, showcasing a bipartisan recognition of the economic risks ahead.
Despite the prevailing fear, there are signs that consumer spending has not yet significantly declined. Retail sales and car purchases surged recently as consumers attempted to make purchases before impending tariffs take effect. Furthermore, restaurant reservations have increased compared to the previous year. However, the anxiety among business leaders is palpable, particularly in sectors like the toy industry, where many companies are delaying orders due to tariffs and fear potential bankruptcy. Analysts warn that if businesses scale back their operations in response to economic fears, it could exacerbate the situation. While there are varying opinions on whether a recession is imminent, the consensus among some economists is that the risks are rising, particularly due to the chaotic trade policies and tariff announcements that have unsettled both consumers and businesses alike. This situation highlights the fragility of the current economic expansion and the potential for a downturn if consumer confidence continues to wane.
TruthLens AI Analysis
Fear is a powerful motivator in economic contexts, and the article highlights how this fear is influencing consumer behavior in the United States. The findings presented in the CNN/SSRS poll reveal a significant level of pessimism among Americans regarding the economy, suggesting that this sentiment could have real implications for economic stability.
Public Sentiment and Economic Impact
The article illustrates that a large portion of the population feels apprehensive about the prospect of a recession. This anxiety is not merely a political concern but also a psychological barrier to economic activity. As consumers become more cautious, their spending habits change, leading to reduced economic growth. This creates a cycle where fear leads to less spending, which in turn results in fewer jobs and further economic contraction.
Self-Fulfilling Prophecy
The concept of a recession becoming a self-fulfilling prophecy is particularly noteworthy. The article emphasizes that as fear of economic downturn spreads, it leads consumers and businesses to tighten their belts. This behavior can create a negative feedback loop, exacerbating the initial fears and potentially leading to the very recession that people are worried about.
Political Context
Analyzing the political landscape, the article attributes part of the economic anxiety to President Trump's policies, including his trade war and chaotic decision-making. This suggests that public perception of leadership and policy effectiveness plays a crucial role in shaping economic confidence. The division in sentiment along political lines is evident, but the article also points out that economic concerns cross party lines, highlighting a shared apprehension among different voter groups.
Market Reactions
In terms of potential impacts on the stock market and the broader economy, these sentiments could lead to volatility. If consumer spending decreases significantly, it could negatively affect sectors reliant on discretionary spending, such as retail, travel, and hospitality. Companies may face pressure on their earnings, which could lead to declines in share prices.
Broader Implications
The fears expressed in the article resonate with global economic themes, particularly in light of ongoing geopolitical tensions and trade issues. This situation could influence international markets and investor confidence on a larger scale, reinforcing the interconnectedness of economies worldwide.
Trustworthiness of the Article
The article appears to be grounded in research from a reputable polling organization, providing a foundation of credibility. However, the framing of the narrative—focusing heavily on fear and pessimism—could lead to a perception of bias. While the data is valid, the interpretation may shape public sentiment in a way that emphasizes anxiety over potential optimism.
In summary, this article paints a picture of an economy at a crossroads, where fear and pessimism may lead to tangible economic consequences. The interplay between consumer sentiment, political leadership, and market reactions creates a complex environment that could shape future economic conditions.