Trump Says He’s Off to Best Start as President. The Economy Says Something Else

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Jobs

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American businesses kept on hiring in Trump’s first months. The 456,000 jobs that have been added in the first three months of the year was more than forecast, and the unemployment rate has ticked up just slightly.  “GREAT JOB NUMBERS, FAR BETTER THAN EXPECTED. IT’S ALREADY WORKING,” Trump said in an April 4 post on social media after the March data were released. 

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Anxiety about the future job market is on the rise, though. The share of Americans expecting unemployment to get worse in the next year is near the highest since 2009. Trump’s tariffs are widely expected to slow the economy down, at least for a while, and when that happens companies tend to retrench on payrolls. 

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Inflation and Spending

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The surge in consumer prices under Biden was the steepest in about four decades, so Trump’s campaign promises to get them under control had resonance. Inflation cooled in the early months of his second administration, with the headline rate matching the lowest recorded since early 2021. That reflects a decline in energy costs, used vehicles, hotel stays and airfares. 

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Again, there’s a gap between hard data and soft numbers from the surveys about what comes next — and again, trade war is the reason. Most economists predict that Trump’s tariffs will make the prices of imported goods more expensive, with knock-on effects on domestic products too — causing inflation to accelerate. Consumers seem to agree, with surveys showing that expectations for both short- and long-term inflation have soared.

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There was a frontloading effect on retail sales from the escalating trade war, as consumers scrambled to buy automobiles, computers and other big-ticket items in case tariffs made them more expensive. At the same time, fears of higher inflation and slower economic growth caused measures of consumer confidence to plummet. 

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Business Investment

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By one measure, US output of business equipment the first quarter was the strongest since 1978, excluding pandemic swings — helped by a surge in aircraft-related production. That represents an encouraging signal for Trump’s push to revive domestic manufacturing.

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But uncertainty around how and when Congress will enact tax legislation, on top of Trump’s vacillating tariff announcements, is causing many companies to put their investment plans — a key driver of economic growth — on hold. 

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Optimism among small businesses soared after Trump’s election victory on the belief he’d pursue tax cuts, deregulation and other business-friendly policies. Many such measures are in the pipeline, but it’s not clear when they’ll take effect. Meanwhile, since tariffs can be especially damaging to smaller firms, their expectations have soured amid the president’s initial focus on trade issues.

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Immigration

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A crackdown on illegal immigration — along with the biggest mass deportation in US history — was among Trump’s highest-profile campaign promises, and since he took office monthly border crossings have plummeted close to zero. There might be a downside for the economy, since the removal of what’s been a boost to the workforce threatens to choke off a key growth engine just as tariffs are poised to bite.