You didn't mention housing. I'm not sure about the US, but in Australia, and I imagine other markets, the housing market is so expensive that people are leveraged up to their eyeballs. Banks are also extremely exposed. Any significant increase in non-housing costs, like fuel, and/or job losses could lead to a wave of defaults and put downward pressure on house prices, possibly leading to a long overdue correction. That sounds good for younger people, who are completely locked out of the market now, but it would be devastating for the many people who would give themselves owing more than their property is worth and unable to make mortgage payments.
“These risks … can feed into and exacerbate one another. For example, maybe higher input prices caused by the war make replacing workers with AI more attractive.”
Of all the great insights in this post, this almost throw-away point stands out to me as the most economically damaging.
Consumers can shift purchases, take on more debt, sacrifice certain wants, etc. But when companies do this - and they most certainly will to make promised Q1 and Q2 earnings - headcount cuts are going to come fast and furious. And consumers have no Plan B for losing their jobs.
And employers will link the cuts to AI. Just like Jack Dorsey at Block did - basically cutting staff by FIFTY PERCENT in one fell swoop, “because AI.”
What was going to likely be a 2027 workforce phenomenon will be pulled into Q2 2026.
And there’s your recession, courtesy of tRump’s inglorious “war.”
And unfortunately there's decent data that companies that downsize are out of business within 5 years. This means the knock on effects of short term downsizing to survie the economic downturn means increased monopolization, worse economic diversity, and even more recession / depression effects in the near future.
Iran suggested on March 13 to allow oil tankers to go through the Strait of Hormuz if they are paid for in Yuan. Let that sink in. Currently oil transactions are dollar-denominated worldwide. If there is a shift away from the dollar, its value will drop.
Also, if Iran & its allies can cut-off Red Sea oil transit through the Bab al-Mandeb strait, oil prices will rise further.
Finally, countries around the world are also affected, and know who to thank.
Forget dinnertime, this was a horrific bedtime story! Kidding, kidding (sorta). So very glad you joined the Bulwark fam. You fit right in, and we're lucky to have you.
How is ANY of this economy or the outlook not the fault of tRump? Both in America and in the world!
There was no urgent need for tRump and DOGE (a fake office) to debilitate so many government agencies and fire productive staff that protected programmes and resources in the USA and other countries.
Rounding up violent felons was what tRump promised he would do. Instead, he has used a Federal Department to round up, jail, deny care to the people who pick our fruits and vegetables, build/repair homes, provide health care to our elderly. These are all things that have made life un-affordable for average people.
And tariffs? Oh boy. Those tariffs are economically unsustainable for us and the world.
tRump didn't have to attack Venezuela and kidnap Maduro, or threaten Cuba with a blockade. tRump did not have any reason to abuse our neighbour and ally Canada, or spook Greenland and Denmark. The world economy got more tenuous with each of tRump's outrageous acts. All these things cost money. Either American tax dollars or European dollars, for example when Denmark moved some of its military personnel and assets to Greenland to protect their territory from the whims of tRump.
Now we add in Iran. Don't think for even one moment that tRump is not completely at fault for Iran. Israel is a small country. Bibi Netanyahu is an imperfect leader despised by the majority of Israelis. Bibi wanted tRump to attack Iran because Iran constantly bombing Israel is a terrible problem for Israel.
But tRump has agency. He could have said he would not join in any Mid East war. Getting suckered into a war because another bully (Bibi) made him? No. I don't buy it. Bibi sucked up to tRump's massive ego. Bibi probably promised tRump the war would make tRump the king of the world. South Korea already gave tRump a crown. It's not like tRump is the kind of person to plan ahead and think about consequences (or surrounds himself with others who could do that for him).
If we need to spread blame, add in the GOP/MAGA Congress who seem to have no idea what is written in the Constitution and their role in governing the country or showing fealty to that Constitution. Perhaps the capitulation of law firms and universities and MAGA SCOTUS to the would-be king were also the encouragement needed to bring us to the economic moment.
Mostly, the faults in our economy and the world's lies with the perfidy of tRump's corruption, braggadocio, narcissism, stupidity (has anyone EVER seen a college diploma from UPenn Wharton? ¯\_(ツ)_/¯ ), giving us energy supply shocks, stagflation or worse, broken alliances, environmental catastrophes, humanitarian catastrophes.
Excellent report and analysis, but I will disagree with your assumption that much of this current economic slowdown and threat of recession isn't trump's fault. Fall of 2024, the US economy was touted as the envy of the world. Who blew up the deficit? Who gave tax cuts to the wealthy and took food from children? Who cut off subsidies to millions seeking affordable health insurance? Who keeps trying to destroy renewable energy projects that insulate people from oil shocks? Who engaged in tariff warfare with allies? Whose tariffs are increasing the price of goods for uS consumers? Who started a needless war in the Gulf without an exit plan? BTW, hundreds or more of US contractors and citizens are still stranded in areas where Iran has reach. Recall the constant beating Biden took for going through with trump's Afghan pull out? Media seems rather tranquil when trump puts American soldiers and citizens at great risk. Weird... But I digress. Whp wants to burn another 200 billion on a needless and senseless war? Again, he feeds the wealthy and military industrial complex as trump goons tell people to swallow it and like it.
Everything the bloated and mentally unfit trump touches dies, including the world's economy. The dimmest of the dim are trying to manage the most complex of issues and they are failing miserably, as expected. The outsource will not be a good one. And not only won't people be able to go to Starbucks because of gas costs, they won't be able to afford a cup of coffee. Maybe poor maga can try and trade in a Melania or trump meme coin for a latte...
I am so glad you joined the Bulwark. Your writing and Will Saletan’s are both so clear and easy to grasp. But why do you think Powell is staying on the Fed Board if it’s “very very unusual?”
In an economy that depends on consumer spending, the massive layoffs of federal workers last year and the massive deportation of immigrant workers that is ongoing cannot be good for consumer spending.
Michael - Trump said before last Christmas that kids should only have 3 pencils & 2 dolls, right? Someone may have already told him that consumers weren't gonna party through his tariff-hobbled economy. Now with the price of gasoline up, every physical product has upwards pressure on press cuz all of has to be shipped. Consumers start to worry about how they'll meet these rising costs, reinforced daily by every gas station sign they pass. Start cutting back where they can, careful about taking on debt since (oops did Catherine forget to mention) interest rates are likely to rise as inflation grows.
Trump may have to sign an Exec Order requiring Americans to buy more stuff
Peabody - why would we have to defend access to fossil fuels, since Trump says we're energy independent and the biggest oil producer? Are Republicans saying Trump is a liar now?
(4) Sometimes it feels like the Trump administration is trying to recreate all the supply-chain snafus we experienced during COVID.
Your footnote, Catherine: the chaos and the incompetence are baked into this regime. They neither know how to avoid it--or care to. They learned nothing from COVID because they don't want to, and we are at their mercy.
So Trump puts in place tariffs that freeze hiring because businesses can’t plan. He deports a large chunk of our workforce, who were also consumers, slowing over all growth and then starts a war that raises fuel prices all around the world. He took the strongest economy in the world, trashed it in less than 18 months and it’s not all his fault? I am thinking this entirely his fault.
Very insightful Catherine, thank you!
You didn't mention housing. I'm not sure about the US, but in Australia, and I imagine other markets, the housing market is so expensive that people are leveraged up to their eyeballs. Banks are also extremely exposed. Any significant increase in non-housing costs, like fuel, and/or job losses could lead to a wave of defaults and put downward pressure on house prices, possibly leading to a long overdue correction. That sounds good for younger people, who are completely locked out of the market now, but it would be devastating for the many people who would give themselves owing more than their property is worth and unable to make mortgage payments.
Regulators of the banking industry seem to be lowering capital requirements. Is this another risk factor?
“These risks … can feed into and exacerbate one another. For example, maybe higher input prices caused by the war make replacing workers with AI more attractive.”
Of all the great insights in this post, this almost throw-away point stands out to me as the most economically damaging.
Consumers can shift purchases, take on more debt, sacrifice certain wants, etc. But when companies do this - and they most certainly will to make promised Q1 and Q2 earnings - headcount cuts are going to come fast and furious. And consumers have no Plan B for losing their jobs.
And employers will link the cuts to AI. Just like Jack Dorsey at Block did - basically cutting staff by FIFTY PERCENT in one fell swoop, “because AI.”
What was going to likely be a 2027 workforce phenomenon will be pulled into Q2 2026.
And there’s your recession, courtesy of tRump’s inglorious “war.”
And unfortunately there's decent data that companies that downsize are out of business within 5 years. This means the knock on effects of short term downsizing to survie the economic downturn means increased monopolization, worse economic diversity, and even more recession / depression effects in the near future.
I wasn’t even thinking that far out. It’s a great point - a lot of this short-term pain will create medium-term losses.
Iran suggested on March 13 to allow oil tankers to go through the Strait of Hormuz if they are paid for in Yuan. Let that sink in. Currently oil transactions are dollar-denominated worldwide. If there is a shift away from the dollar, its value will drop.
Also, if Iran & its allies can cut-off Red Sea oil transit through the Bab al-Mandeb strait, oil prices will rise further.
Finally, countries around the world are also affected, and know who to thank.
Forget dinnertime, this was a horrific bedtime story! Kidding, kidding (sorta). So very glad you joined the Bulwark fam. You fit right in, and we're lucky to have you.
The fact that Florsheim is suing him is the mot jus.
C'mon we were all just waiting for that to drop 😄
So much to look forward to! One quibble with your analysis: everything is Trump’s fault.
"And much of it isn’t even Trump’s fault!"
How is ANY of this economy or the outlook not the fault of tRump? Both in America and in the world!
There was no urgent need for tRump and DOGE (a fake office) to debilitate so many government agencies and fire productive staff that protected programmes and resources in the USA and other countries.
Rounding up violent felons was what tRump promised he would do. Instead, he has used a Federal Department to round up, jail, deny care to the people who pick our fruits and vegetables, build/repair homes, provide health care to our elderly. These are all things that have made life un-affordable for average people.
And tariffs? Oh boy. Those tariffs are economically unsustainable for us and the world.
tRump didn't have to attack Venezuela and kidnap Maduro, or threaten Cuba with a blockade. tRump did not have any reason to abuse our neighbour and ally Canada, or spook Greenland and Denmark. The world economy got more tenuous with each of tRump's outrageous acts. All these things cost money. Either American tax dollars or European dollars, for example when Denmark moved some of its military personnel and assets to Greenland to protect their territory from the whims of tRump.
Now we add in Iran. Don't think for even one moment that tRump is not completely at fault for Iran. Israel is a small country. Bibi Netanyahu is an imperfect leader despised by the majority of Israelis. Bibi wanted tRump to attack Iran because Iran constantly bombing Israel is a terrible problem for Israel.
But tRump has agency. He could have said he would not join in any Mid East war. Getting suckered into a war because another bully (Bibi) made him? No. I don't buy it. Bibi sucked up to tRump's massive ego. Bibi probably promised tRump the war would make tRump the king of the world. South Korea already gave tRump a crown. It's not like tRump is the kind of person to plan ahead and think about consequences (or surrounds himself with others who could do that for him).
If we need to spread blame, add in the GOP/MAGA Congress who seem to have no idea what is written in the Constitution and their role in governing the country or showing fealty to that Constitution. Perhaps the capitulation of law firms and universities and MAGA SCOTUS to the would-be king were also the encouragement needed to bring us to the economic moment.
Mostly, the faults in our economy and the world's lies with the perfidy of tRump's corruption, braggadocio, narcissism, stupidity (has anyone EVER seen a college diploma from UPenn Wharton? ¯\_(ツ)_/¯ ), giving us energy supply shocks, stagflation or worse, broken alliances, environmental catastrophes, humanitarian catastrophes.
Or, i suppose you could blame Epstein.
Excellent report and analysis, but I will disagree with your assumption that much of this current economic slowdown and threat of recession isn't trump's fault. Fall of 2024, the US economy was touted as the envy of the world. Who blew up the deficit? Who gave tax cuts to the wealthy and took food from children? Who cut off subsidies to millions seeking affordable health insurance? Who keeps trying to destroy renewable energy projects that insulate people from oil shocks? Who engaged in tariff warfare with allies? Whose tariffs are increasing the price of goods for uS consumers? Who started a needless war in the Gulf without an exit plan? BTW, hundreds or more of US contractors and citizens are still stranded in areas where Iran has reach. Recall the constant beating Biden took for going through with trump's Afghan pull out? Media seems rather tranquil when trump puts American soldiers and citizens at great risk. Weird... But I digress. Whp wants to burn another 200 billion on a needless and senseless war? Again, he feeds the wealthy and military industrial complex as trump goons tell people to swallow it and like it.
Everything the bloated and mentally unfit trump touches dies, including the world's economy. The dimmest of the dim are trying to manage the most complex of issues and they are failing miserably, as expected. The outsource will not be a good one. And not only won't people be able to go to Starbucks because of gas costs, they won't be able to afford a cup of coffee. Maybe poor maga can try and trade in a Melania or trump meme coin for a latte...
I am so glad you joined the Bulwark. Your writing and Will Saletan’s are both so clear and easy to grasp. But why do you think Powell is staying on the Fed Board if it’s “very very unusual?”
In an economy that depends on consumer spending, the massive layoffs of federal workers last year and the massive deportation of immigrant workers that is ongoing cannot be good for consumer spending.
Michael - Trump said before last Christmas that kids should only have 3 pencils & 2 dolls, right? Someone may have already told him that consumers weren't gonna party through his tariff-hobbled economy. Now with the price of gasoline up, every physical product has upwards pressure on press cuz all of has to be shipped. Consumers start to worry about how they'll meet these rising costs, reinforced daily by every gas station sign they pass. Start cutting back where they can, careful about taking on debt since (oops did Catherine forget to mention) interest rates are likely to rise as inflation grows.
Trump may have to sign an Exec Order requiring Americans to buy more stuff
Love you and the rest of bulwark peeps!
Republicans get elected and immediately undo every single renewable energy policy (wind, solar, batteries) enacted by Democrats.
I think this Republican campaign of blocking renewables is much like Iran's blockade of the Strait of Hormuz.
If the US had maintained a commitment to renewable energy, the blockage of the Strait would be much less consequential.
And now Republicans say the US has to defend access to fossil fuels with US lives and treasure.
Peabody - why would we have to defend access to fossil fuels, since Trump says we're energy independent and the biggest oil producer? Are Republicans saying Trump is a liar now?
(4) Sometimes it feels like the Trump administration is trying to recreate all the supply-chain snafus we experienced during COVID.
Your footnote, Catherine: the chaos and the incompetence are baked into this regime. They neither know how to avoid it--or care to. They learned nothing from COVID because they don't want to, and we are at their mercy.
So Trump puts in place tariffs that freeze hiring because businesses can’t plan. He deports a large chunk of our workforce, who were also consumers, slowing over all growth and then starts a war that raises fuel prices all around the world. He took the strongest economy in the world, trashed it in less than 18 months and it’s not all his fault? I am thinking this entirely his fault.