A Trump recession?

Is the U.S. economy headed for a recession? Stocks have plunged. So have measures of consumer and business confidence. Forecasters expect slower growth, higher unemployment and faster inflation than they did just a few months ago — and Wednesday, policymakers at the Federal Reserve said they agreed.

The administration has announced and then delayed tariffs; it has ended and then restored programs. Even some experts who are sympathetic to President Donald Trump’s aims worry that businesses will pull back on hiring and investing in the face of so much uncertainty — a word that the Fed chair used repeatedly in a news conference Wednesday.

Most forecasters still don’t expect a recession. But they say the chances of one have risen sharply — a turnabout from when Trump took office. How likely is a downturn? Here are three big questions about the Trump economy.

1. Actions versus feelings?

The evidence of a slowdown comes mostly from “soft” indicators. These are surveys showing that businesses are more reluctant to hire and invest, and that workers are more worried about losing their jobs.

“Hard” indicators — measures of actual activity — haven’t shown the same weakness. Job growth was solid in February, for example. Retail sales slumped in January but rebounded last month, although less than forecasters had expected.

Attitudes almost always change before actual behavior does. A company that loses a contract today probably won’t lay off its staff tomorrow; an employee who hears a rumor of job cuts might not immediately cancel a long-planned vacation. And even when behavior does shift, it takes time to show up clearly in the economic data.

But it is also possible that falling confidence won’t ever translate into real-world decisions. Consumer confidence was low through much of the Biden administration, for example, but actual spending never faltered. And evidence suggests that sentiment measures have become less reliable in an era of extreme partisanship.

2. How determined is Trump?

Trump made tariffs a centerpiece of his campaign last year. But many people on Wall Street didn’t believe he would follow through — in part because if he did, stocks would fall and Trump would reverse course.

So far, that has been a losing bet. In his first term, Trump worried when markets fell and bragged when they rose. But when stocks fell after tariff announcements this month, he disregarded the selloff and refused to back down. “Markets are going to go up and they’re going to go down,” he told reporters last week. He and members of his administration now suggest that a period of economic pain is necessary to balance the economy. (Hardly any economists agree.)

Still, Trump could change tactics if the slump worsened.

3. Is there a cushion?

Coming into this year, most forecasters expected economic output to grow about 2%, adjusted for inflation. That’s slower than the 2.5% it grew last year, but it’s a long way from a recession.

Yet even before Trump took office, some forecasters warned that the economy was not as strong as well-known indicators like the unemployment rate suggested. Hiring was slowing; the housing market was frozen in place; consumers were saving less to maintain their spending.

“All of these things were pretty obvious even in December,” said Neil Dutta of Renaissance Macro Research, a financial firm. He argues that a slowdown in growth was inevitable this year, regardless of who won the election — which would mean that Trump is operating with less of an economic buffer than most people believe.

The economy has repeatedly proved doubters wrong in recent years, and it may do so again. But it doesn’t take a recession to cause real hardship. Even a mere slowdown in growth could leave hundreds of thousands out of work — and, if history is any guide, send Trump’s approval ratings through the floor. That’s the kind of outcome presidents usually do everything in their power to avoid.

This article originally appeared in The New York Times.

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